Ban of Wheat Exports

May 16, 2022

On 14^th May 2022, India banned wheat exports with some exceptions. This announcement came days after the central government had announced that this year record shipments of wheat are being targeted. this year.

Why was this decision taken?

This decision was taken by the government as scorching heatwaves in the country’s northern parts have curtailed output resulting in skyrocketing domestic prices. The decision was taken to manage India’s overall food security and to support the needs of the vulnerable and neighbouring countries.

Why has the price of wheat skyrocketed in the country?

Due to rising energy and food prices, India’s annual retail inflation reached 7.79 per cent in April. Due to this, wheat prices in some places across the country have risen to Rs 25,000 per tonne which is way above the government’s minimum support price of Rs 20,150. Wheat outputs were not low this year but due to unregulated exports, local prices have risen. Also, labour, fuel, packaging, and transportation costs have also increased which affected the price of wheat flour.

What is the exception to this ban?

The Central government will be allowing exports to those countries that will be requesting them and to those shipments for which letters of credit have been issued on or before 13^th May 2022.

How did the heatwave affect wheat production?

In February 2022, the government had forecasted that the country’s wheat production will be 111.32 million tonnes but in May 2022 it was cut to 105 million tonnes. A temperature spike in mid-March could also mean that the production of wheat will be around 100 million tonnes or lower.

Will India’s wheat ban affect global rates?

Ukraine and Russia are the world’s two biggest suppliers of wheat. The war between them has disrupted this supply chain. Also, there have been poor wheat harvests in China and India’s low production supply have affected the global grain supply. The second-largest wheat producer in the world is India and it has around 10 per cent of global grain reserves. Hence, for the last few months, the world was looking to India for wheat supplies. India had plans of exporting 10 million tonnes of wheat this year. But, this recent export ban will drive prices across the globe and will hit hard the poor consumers in Africa and Asia.

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