16 May 2022  |   05:19am IST

G7 nations frown as India bans wheat exports

Citing the risk of food security India has banned exports of wheat effective immediately. Other reasons which were mentioned are partly due to the ongoing war in Ukraine and as a scorching heat wave curtailed output and domestic prices hit a record high. Wheat prices in India have risen to record highs, in some spot markets hitting Rs 25,000 per tonne, well above the government’s minimum support price of Rs 20,150 per tonne. Rising food and energy prices pushed India’s annual retail inflation near an eight-year high in April this year.

The move to ban wheat exports comes after huge crop loss due to a heat wave in March. The government is also under pressure to rein in inflation that surged to 7.79 per cent in April. Apart from the weather onslaught, India’s reserve stocks of wheat, a buffer against famine, have been depleted by the distribution of free grain during the COVID-19 pandemic.

Even though India is not one of the world’s top wheat exporters, the current ban on wheat exports can drive global prices to new peaks given already restricted supply, hitting poor consumers in Asia and Africa. Agriculture ministers from the G7 industrialised nations immediately condemned India’s decision on Saturday. “If everyone starts to impose export restrictions or to close markets, that would worsen the crisis. We call on India to assume its responsibility as a G20 member,” German agriculture minister Cem Ozdemir said at a news conference in Stuttgart.

Government officials in New Delhi clarified on Saturday that India would still allow exports backed by already issued letters of credit and to countries that request supplies “to meet their food security needs”. A spike in the global prices for wheat threatened the food security of India and neighbouring and vulnerable countries, India’s Directorate of Foreign Trade said in a notice in the government gazette dated Friday.

Even though there is no dramatic fall in India’s wheat output this year, government officials said that unregulated exports had led to a rise in local prices for the grain. “We don’t want wheat trade to happen in an unregulated manner or hoarding to happen,” commerce secretary BVR Subrahmanyam told media.

The notification said that the government had taken the decision "in order to manage the overall food security of the country and to support the needs of the neighbouring and other vulnerable countries". Also, the move is a complete U-turn in barely two days after the Union government had announced its plans for a big export push. “The Centre will send trade delegations to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon for exploring possibilities of boosting wheat exports from India. India has set a target of a record 10 million tonnes of wheat in the 2022-23 amid rising global demand for the grain globally,” a government statement said which was released on Thursday last week.

According to media reports, the ban will help the India government to crush attempts being made by some foreign players to hoard Indian wheat for price manipulation in the international market. Wheat and wheat flour retail prices have increased by 14 to 20 per cent over the last one year. Amid this, India's wheat exports stood at an all-time record high of seven million tonnes in the 2021-22 fiscal year. In the current fiscal 2022-23, India has contracted 4.3 million tonnes of wheat for exports till now. According to Commerce Secretary BVR Subrahmanyam, 1.2 million tonnes of wheat were exported in April and May while 1.1 million tonnes are expected to be shipped soon. India, according to reports, was looking to export 10 million tonnes of wheat in the current fiscal year. The ban, however, might be revoked if the situation improves.

The surprise announcement by India drew sharp criticism from the Group of Seven industrialised nations' (G7) agriculture ministers meeting in Germany, who said that such measures "would worsen the crisis" of rising commodity prices. In a global village individual countries decision does affect the global trade and balance and prices too gets volatile making it difficult for the importing countries to fathom the immediate loss. Undoubtedly, ‘Nation First’ has also been the major criteria for any trade or external affairs policy and India has every right to gauge its situation and make food secure for its citizens.


IDhar UDHAR

Idhar Udhar