Agri Business

India bans wheat exports with immediate effect

Subramani Ra Mancombu | | Updated on: May 14, 2022

Wheat exports banned

Only government-to-government deals will be allowed

The Indian government has banned the export of wheat with immediate effect in an effort to ensure ample supplies are available within the country. The move also comes at a time when fears of production being lower than even revised estimates of 105 million tonnes (mt).

In a notification issued late last night, the Centre said there has been a sudden spike in prices of wheat “arising out of many factors ”as a result of which the food security of India, neighbouring and other countries are at risk”. According to sources, the ban was expected especially after government officials expressed the fear that wheat production could only be around 95 mt.

Rise in global wheat prices

More than lower production, concerns were raised over rising wheat prices across the globe. A trade analyst said the government had probably acted quickly since the US Department of Agriculture had pointed to a 35 mt global shortage of wheat two days ago.

Reuters says, “Global buyers were banking on the world’s second-biggest wheat producer for supplies after exports from the Black Sea region plunged following Russia’s invasion of Ukraine in late February. Prior to the ban, India was targeting to ship out a record 10 million tonnes this year.”

Concerns were further raised after wheat procurement for distribution through the public distribution system by the Food Corporation of India (FCI) dropped alarmingly. As of May 13, the FCI had procured 17.9 mt of wheat, lower by at least 50 per cent compared with the year-ago period.

At least 5 mt of contracts have been signed for exports, while many global trading houses are reported to be holding huge stocks, procured directly from farmers. Official sources said the Centre might look at providing wheat on a government-to-government basis.

‘Managing overall food security’

The government order, curbing wheat exports, also said the move was “to manage the overall food security of the country and to support the needs of neighbouring and vulnerable countries”, the Centre was amending the foreign trade policy making wheat a restricted item for exports from “free”.

Only wheat for which there are proper documents such as Letters of Credit will be allowed if they had been completed before May 13. Also, exports will be allowed with government permission which implies it could be more of a government-to-government deals, where India could look at helping any country facing food security.

On Thursday, the USDA said the production of food commodities such as wheat, maize (corn) and soybean could all be lower this year. This is mainly in view of the Russia-Ukraine war since both these countries are significant exporters of wheat, corn and sunflower oil, another commodity whose shortage has resulted in edible oils prices flaring up. On Friday, wheat on the Chicago Board of Trade rose to an eight-week high of $11.77 a bushel ($432.32 a tonne).

Published on May 14, 2022
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