India bans wheat exports with immediate effect

Since India is the world’s second-largest wheat producer, any such ban could aggravate a worldwide shortfall worsened by the war in Ukraine

FPJ BureauUpdated: Saturday, May 14, 2022, 11:19 PM IST
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India bans wheat exports with immediate effect |

NEW DELHI: A sharp fall in the wheat production has forced the government to stop supplying wheat in fair price shops and banned its exports with immediate effect from Friday to calm down prices.

Since India is the world’s second-largest wheat producer, any such ban could aggravate a worldwide shortfall worsened by the war in Ukraine. It could also reinforce fears of a hunger crisis across the globe and add to concerns about food insecurity.

The war played havoc with wheat supplies since both Ukraine and Russia are major producers. The fighting and blockades in the Black Sea have further disrupted the movement of the grain. To cap it, poor harvests in China and a heat wave in India will further impact stocks.

The flour mills are, therefore, buying bulk of the wheat coming in the market and stocking it in their godowns to make a killing when the prices spike in the coming weeks.

The food ministry has cut its wheat production forecast from 111 million tonnes earlier to 105 million tonnes while those in the trade expect the crop to be even smaller. They say the severe heat wave in northern parts may also cause harvest delay.

India still has about 10 percent of the world’s grain reserves, a large surplus resulting from heavily subsidizing the farmers. These reserves could help make up for global supply shortages. According to a report in the New York Times, President Biden was told in April that India was ready to supply the world from its reserves. To that extent, the export ban seems to be an about-turn.

According to New York Times, the ban could be a further blow to international organizations working to counter the increasing threat of widespread hunger. The World Food Program, a United Nations agency, has warned that an additional 47 million people could go hungry as the war’s domino effect adds to an existing crisis of steep increases in food prices and a fertilizer shortage.

Retail inflation in wheat and atta (flour) jumped to 9.59% in April from 7.77% in March

Even while banning the wheat exports, the Modi government said the shipments of wheat are allowed for Letters of Credit that have been already issued.

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