NEW DELHI – After Russia invaded Ukraine – the two countries responsible for supplying about a third of the world’s wheat together – and sent food prices to record highs this year, India was to take steps to fill the gap. No more.
In an order from the Commerce Ministry, Indian officials said they had taken the decision considering the needs of India and its neighbors. India’s food security was “at risk” due to rising international prices, the ministry said.
The announcement comes just weeks after Indian officials and international analysts talked about the possibility of significantly increasing India’s exports to fill the void left by the war in Ukraine. International food prices have risen to record highs in recent months, putting pressure on billions of people, especially the world’s poorest, UN officials have warned.
India tries to adapt to extreme heat but pays a heavy price
But this spring’s record-breaking heatwave – March was India’s warmest month – has damaged Indian crops and in some cases reduced wheat production by a quarter. As Indian agricultural researchers and traders rush to buy food to sell in the international market, according to government figures, the Indian government has struggled to shop for its own domestic food bank and ration program.
Like many countries, India is grappling with rising inflation which is biting the household budget and even the diet. Food inflation rose to 7.3 percent in April, the government said.
Egypt, the world’s largest importer of Russian and Ukrainian wheat, is currently in talks with India to import 1 million tonnes. Turkey and several African countries that rely on wheat imports from the Black Sea region have also been queuing up to buy from India in recent weeks. India recently sent trade delegations to nine countries, including Tunisia, Morocco and Indonesia, to discuss ways to boost exports.
“At a time when the world is facing a shortage of wheat, Indian farmers have stepped in to feed the world,” Prime Minister Narendra Modi said during a visit to Germany earlier this month. “Whenever humanity faces a crisis, India comes up with a solution.”
To help increase wheat exports, the Indian government has rushed to set up 200 labs to test export quality, add more rail wagons for transportation and prioritize exports from ports.
Egypt approves India as wheat supplier In April, Commerce Minister Piyush Goel said in a tweet that the country was “ready to serve the world.”
Now, it’s not immediately clear which deal will go through. The Commerce Ministry, which oversees the trade, said in an order on Friday that shipments would be allowed to proceed where an unchangeable letter of credit had been issued. The Indian government may also grant special permission for export to countries “to meet their food security needs”. Otherwise, all exports will come to a standstill.
Tunisia is one of the countries that has seen the biggest economic consequences of the war in Ukraine
Analysts say the decision to suspend exports was the right one at a time of global uncertainty.
“We should have a surplus because of climate change and food security concerns,” said Debinder Sharma, an agricultural policy expert. “We have a huge population to take care of. Who knows [whether] The epidemic may not come again?
Through the epidemic, the federal government provided 5 kg of wheat or rice per month and only 1 kg of pulses per month in addition to the existing food subsidy – about 11 pounds and just over two pounds, respectively. The program was extended to September earlier this year.
But the pressure on the system became clear last week when the government announced more rice instead of wheat under the program.
Government wheat procurement has fallen below the 15-year low of 20 million tonnes this year, following a record high of 43 million tonnes in 2021. Exports were a key factor.
The skyrocketing global wheat price is a gift for traders. The World Bank predicted in April that wheat prices would reach an all-time high this year, rising more than 40 percent. Wheat exports from India have more than tripled in size.
Falling production, rising exports and high fuel prices have led to sharp rise in domestic wheat prices in recent weeks. Wheat is one of the most popular food ingredients in the country, and rising prices are squeezing consumers across the board.
Experts say India’s last wheat crisis in 2005 served as a warning story. India’s high exports eroded its reserves, forcing it to import wheat in later years.
“India should not make the same mistake,” Sharma said. Next year, if the need arises, “the stock may not be available and prices will be impossible.”