The rise in prices derived from the war and the low productivity marked by the strong heat wave that has been shaking India since the beginning of the month has forced the Government to restrict wheat exports, a measure that will not affect neighboring countries with a deficit of food. In this way, the Government has decided to keep an open window to sell this cereal to vulnerable countries whose food security is at risk.
India's Directorate General of Foreign Trade announced on Saturday that "immediate effect" wheat exports would be banned, except for shipments for which "an irrevocable letter of credit has already been issued".
However, this Sunday, the Indian Secretary of Commerce, B.V.R. Subrahmanyam has assured through a statement that part of the harvest will continue to be sold to countries that are at risk of food shortages, such as its neighbors Bangladesh, Nepal and Sri Lanka.
In the statement, this measure has been justified by which, according to Subrahmanyam, "the Government of India is committed to the food security requirements of India, neighboring countries and other vulnerable developing countries that are negatively affected by sudden changes in the world wheat market and cannot access sufficient supplies of wheat.
The key objective of the Indian government with the restrictions on exports is to control internally the increase in the price of wheat, which globally has increased by more than 40% since the beginning of the year. In addition to curbing the country's inflation, which rose to 7.79% last April, its highest level since May 2014. And also preventing wheat "from being diverted in an unregulated manner and running the risk of being hoarded and not be used for the food needs of vulnerable countries and populations", added the secretary.
Before the war, Ukraine and Russia accounted for 30% of world exports of wheat and barley. Since the Russian invasion on February 24, Ukrainian ports have been blocked and grain silos have been destroyed. The crisis, therefore, has not only been international. Since the beginning of May, the Asian country has been hit by extreme heat waves, which have caused some parts of the country to reach 47 degrees Celsius, temperatures that have affected harvests and have stunted production.
The concatenation of these events, says Subrahmanyam, has caused India's wheat production to drop by three million tons, compared to 109 million tons last year. Thus, wheat prices have shot up 20-40% in India.
According to data from the Ministry of Commerce, the population of India consumes almost 94% of its harvest, a total of 102 million tons in 2021. In addition, it is the second largest producer of wheat, covering 13.5% of the production. world. In 2021, it sold seven million tons, its export record, and in 2022 it intended to export 10 million.
The trajectory of wheat exports and the statements made by Narendra Modi, the Indian prime minister, last April, do not agree with the veto imposed this weekend. Modi reported that India could feed the rest of the world if the World Trade Organization gave it permission to do so. Statements that support Subrahmanyam, who has assured that the exponential increase in prices "seems to be a panic reaction rather than a reaction based on a genuine collapse in supply or a sudden increase in demand."
However, the G7 agriculture ministers have criticized this decision, considering that "protectionism" can worsen the crisis of raw materials. The German Minister of Agriculture, Cem Özdemir, has specified that "if everyone starts imposing such export restrictions or even closing markets, it will only worsen the crisis and also harm India and its farmers".
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