After Indian Prime Minister Narandra Modi promised in early May that India would “step forward to feed the world,” in light of the wheat shortage caused by the war in Ukraine, the world’s second largest producer of wheat—India—has now performed a drastic turnaround. The export of wheat from India has now been banned to ensure the overall food security of the country, as well as to support the needs of neighboring and vulnerable nations.
On May 13th, the Indian government proclaimed wheat export to be prohibited, only allowing exports where either an “irrevocable letter of credit has been issued,” or where permission is granted “by the Government of India to other countries to meet their food security needs and based on the request of their governments.”
The decision was made due to diminishing food stocks following the increased world-wide demand for wheat, as well as an early heat wave in March that blighted harvests in India. Due to the prolonged war in Ukraine, this trend is expected to last for months to come, causing the Indian government to backpedal on its initial offer to “feed the world.”
The ban of wheat exports, however, affected the Indian marketplace, as well as the global market. Many farmers had been selling their wheat at premium prices; some had even held on to their produce expecting a further rise in prices. With the ban of exports however, local wholesale prices fell marginally.Now farmers feel they are being duped. “It is the farmers’ interest that is often sacrificed to keep consumer prices low,” said farmer Harman Brar in an interview with Al Jazeera.
At the World Economic Forum in Davos, Indian Commerce and Industry Minister Piyush Goyal said, “today, 22 countries of Europe have regulations on exports to protect their food security. Different countries at different points in time had to take extraordinary measures in public interest.” The minister expressed hope that the export ban might cool domestic prices and help battle inflation, which reached an eight-year high in April with 7.8%.
Prices didn’t fall as low as expected, though, since crop production might actually be significantly lower than official government estimates from earlier this year suggested. While the Ministry of Agriculture estimated in mid-February a record of 111 million tonnes of wheat production for the year, this number was already revised to be lower than 105 million tonnes in early May. Flour millers, such as Sandeep Bansal, are going even further: “We are expecting a crop size lower than 95 million tonnes. The wide gap between official estimates and actual production is showing up in prices and is the reason why wheat prices did not crash after exports were banned,” Bansal told Al Jazeera.
World market prices, however, have reached new highs as a result of the export ban. Meanwhile, India’s decision is not the only one of its kind in recent months. China restricted the export of fertilizers; Indonesia temporarily banned exports of palm oil in April to cool local prices; Argentina hiked export taxes in March to combat the inflation hitting its economy.
