Wheat exports banned to halt rising prices
HEAT WAVE DENTS SIZE OF WHEAT CROP, AS UKRAINE WAR ADDS TO CRISIS
India has banned exports of wheat effective immediately, citing a risk to its food security, partly due to the war in Ukraine. A notice in the government gazette by the Directorate of Foreign Trade, dated Friday, said a spike in global prices for wheat was threatening the food security of India and neighbouring and vulnerable countries.
A key aim is to control rising domestic prices. Global wheat prices have risen by more than 40 per cent since the beginning of the year. The government said it would still allow exports backed by already issued letters of credit and to countries that request supplies “to meet their food security needs”.
The move to ban overseas shipments was not in perpetuity and could be revised, senior government officials told a press conference.
Global buyers were banking on supplies from the world’s second-biggest wheat producer after exports from the Black Sea region plunged following the war in Ukraine.
Record shipment planned
Before the ban, India had aimed to ship a record 10 million tonnes this year.
The officials added that there was no dramatic fall in wheat output this year, but unregulated exports had led to a rise in local prices. “We don’t want wheat trade to happen in an unregulated manner or hoarding to happen,” commerce secretary BVR Subrahmanyam told reporters in New Delhi. Although not one of the world’s top wheat exporters, India’s ban could drive global prices to new peaks given already tight supply, hitting poor consumers in Asia and Africa particularly hard.
“The ban is shocking,” a Mumbai-based dealer with a global trading firm said. “We were expecting curbs on exports after two to three months, but it seems like the inflation numbers changed the government’s mind.”
Rising food and energy prices pushed India’s annual retail inflation near an eight-year high in April, strengthening expectations that the central bank would raise interest rates more aggressively.
Wheat prices in India have risen to record highs, in some spot markets hitting 25,000 rupees ($320) per tonne, well above the government’s minimum support price of 20,150 rupees.
Rising fuel, labour, transportation and packaging costs are also boosting the price of wheat flour in India.
It was not wheat alone. The rise in overall prices raised concerns about inflation and that’s why the government had to ban wheat exports, said another senior government official.