This is where it gets interesting. It comes down to a careful balance by governments in power who control wheat production. There are four constituents that the government needs to consider while making its decisions. Let’s go through them one by one to understand what forces are at play with each of them and how much importance needs to be given to each.
The urban Indian (consumer)
The big winner in this current game is the urban Indian who gets his wheat at a lower price than if there was no export ban. This is not a small voter base for any government and is a clear win for the government. Let’s move on to the more thorny ones.
The Indian farmer (producer)
The current government is willing to upset this essential constituent of our democracy because of the following. Firstly, the total amount of lost earnings is meagre as India exports a tiny part of its wheat production. Most wheat produced in India is used for domestic consumption. Coupled with this, the government needs to ensure that it has enough grain to fulfil its household food security programmes that impact rural villagers across the nation. More farmers/villagers will gain by reduced wheat prices than those that will lose due to lower-income. Add to this the fact that in the MY 2022/23 wheat crop, yields are expected to be down 10-15% from the previous year due to unseasonal bad weather this year. This reduces the supply in any case to the food security programmes.
Finally, the government has delivered on other rural priorities, including expanded electrification and access to toilets. Keeping in mind all these factors, it seems that maybe the government is not as blind to different forces as it may seem at first glance.
The importing countries
Here India and its politicians have decided to use wheat to gain favourable negotiations with countries in the Middle East and beyond. Every country needs to leverage its strengths and work to improve the position of its people. India, too has used this situation to constitute trade agreements to import goods that Indians need, for example, sending wheat against oil imports. Therefore using its wheat to get better terms of trade seems like fair game. It should be pointed out that this strategy is followed by all nations, no matter what sound bites are floated over BBC or CNN.
The G7 nations
India has faced much international criticism for its banning of wheat exports. Coupled with it, we have got flack for buying Russian oil. The funny part is that all the European countries continue to purchase Russian oil (Germany especially) and are pontificating to us to stop using Russian crude. This seems double standard at best, and plain hypocrisy at worst. What’s good for the goose is good for the gander!
Final analysis
In summary, it may be said that the decision to ban wheat exports is not plain or simple. Looking at the situation from a 360-degree angle helps one form a more nuanced opinion on the pros and cons of this tricky issue. There is no right or wrong. Just different interests that need to be balanced. It may not be fair, but then, neither is life.
