Amidst the Ukraine conflict that has sent global food prices spiralling, India yesterday slapped a ban on wheat export, raising concerns over global food security.
India is the second top wheat growing nation after China and currently the single largest exporter of the grain to Bangladesh.
On Saturday, export decision came just a month after India, with enough grains in hand, was ready to “serve the world.”
Though an Indian Commerce Ministry notice announced the export ban it said it would keep a window open for some supplies to its neighbours. Food officials in Bangladesh told Dhaka Tribune on Saturday that they were trying to understand how far the Indian export ban was going to impact Bangladesh's imports of Indian wheat.
An Agriculture Ministry official told this correspondent that if supplies from India shrank, Bangladesh again would have to look for new markets like Brazil and source more wheat from Canada and Australia.
Earlier, Bangladesh realigned itself from its wheat import dependence away from the Black sea zone to India. In recent years, Bangladesh sourced two-thirds of its over 6 million tons of yearly wheat needs from Russia-Ukraine but, in the current fiscal the country imported 66% of wheat requirements from India alone due to complexities arising out of the West-imposed sanctions on Russia. Traditionally Russia and Ukraine together command over a quarter of the global wheat trade.
A United States Department of Agriculture (USDA) recent market analysis stated: “While the Russia-Ukraine war will affect Bangladesh’s annual wheat supply, traders are already looking to India, the largest supplier, to make up the volume. The industry also stated it will look to Australia, Canada, and the United States for higher quality wheat.”
What the Indian export ban notice says
The Indian commerce ministry notice mentioned the global price hike and food security of India as reasons for slapping an export ban on wheat.
However, it said export would be allowed in case of shipments where irrevocable letters of credit have already been issued on or before May 13. It spoke of keeping a window open for neighbours but that part of the notice was vaguely phrased, leading to some confusion over Bangladesh's prospect of enjoying a sustained import line.
Bangladesh's domestic wheat production meets only 13% of its yearly requirement while the remaining 87% has to be imported, making the country among the top five importers of the grain in the world.
Why India goes for this sudden export ban
Market sources say though there is some concern over heat-induced crop losses in India, there is no projection of any dramatic fall in its robust wheat yields this year.
Yet the Indian government took the move mostly to rein in a trading nexus that has been allegedly hoarding the foodgrains, thereby jacking up prices of wheat in India's domestic market.
India is hoping that an export ban will work as a disincentive for dishonest traders who are pursuing hoarding as a means of profiteering amidst the crisis.
The wheat export ban decision came just a day after data showed India's annual consumer price inflation hit a near eight-year-high of 7.79% in April and retail food inflation surged even higher to 8.38%.
Interestingly, the decision also came just a day after the country's department of commerce issued a press release regarding sending trade delegations to nine countries – Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon – “for exploring possibilities of boosting wheat exports from India.”
India’s wheat exports topped an all-time-high of 7 million tons valued at $2.05 billion in the fiscal ending on March 31, 2022. In mid-February, India's Agriculture Ministry estimated the country’s 2021-22 wheat crop (marketed in 2022-23) at a record 111 million tons. Based on that, it was expected that India’s wheat shipments would be anywhere from 10 million tons to 15 million tons this fiscal. On April 15 this year, Indian Commerce and Industry Minister Piyush Goyal tweeted that “Indian farmers have ensured our granaries overflow & we are ready to serve the world.”
