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  Indian wheat exports take a big turn, hurting farmers and impacting food markets
 

2022-05-25 11:02:21

 

The global wheat market has been strained by the reduction in the output of traditional exporting countries and the impact of the war between Russia and Ukraine. India, which originally intended to help alleviate the global shortage of wheat supply, made a policy turn on May 13 and banned wheat exports, which not only made the global wheat market difficult. Rising wheat prices, adding to the woes, will hurt farmers in India and hit the grain market.

Global wheat supply is tight, India is willing to lend a hand
Affected by the reduction of production in Canada, Europe and Australia, the world's traditional wheat exporters, due to drought at the beginning of this year, and Russia's invasion of Ukraine, which has devastated the Black Sea wheat-producing region, both production and exports have plummeted, and the global wheat supply has become tight.
 
India's Business Standard reported on May 16, citing data from the U.S. Department of Agriculture, that Russia, Ukraine, Europe, the United States and Canada have historically been the world's largest wheat exporters, accounting for about 100 percent of global wheat exports from 2015 to 2020. 60%.
 
However, in recent seasons, the above-mentioned wheat exporting countries have faced major production reductions due to wars or droughts in North America and Europe, and their share of total exports has dropped to only 50.7% in 2021 and 2022.
 
On this occasion, India, the world's largest grain producer, said it is willing to increase wheat exports to ease global supply constraints.
 
BBC India news editor Vikas Pandey wrote an article on May 16, citing a senior Indian Commerce Ministry official who told him in early May that New Delhi was optimistic about increasing the country's wheat exports to meet the surge in global demand, The official's remarks echoed Prime Minister Narendra Modi's previous statement that "India was ready to feed the world".
 
India's policy takes a big turn to ban wheat exports
India is the world's second-biggest wheat producer after China, but exports little bulk of the grain because of high government-subsidized domestic prices and huge domestic demand for the grain.
 
But India's seed selection and improved farm management over the past decade have put the country on track for a record harvest this year, opening the door to bulk wheat exports.
 
Indian wheat exporters had previously expected wheat exports to reach 12 million tonnes in 2022 and 2023, up from 7.2 million tonnes last year.
 
However, India's policy of exporting wheat has taken a major turn. India's Directorate General of Foreign Trade (DGFT) issued a notice on May 13 to implement a temporary ban on wheat exports due to food security and rising domestic inflation. India's approach has drawn criticism from the Group of Seven (G7) of industrialized nations, who are concerned that India's wheat export ban will further lead to a rise in food protectionism at a time when global inflation has soared due to the Russia-Ukraine war.
 
Food protectionism: global food shortages may worsen
Coincidentally, the "International Food Policy Research Institute" (IFPRI) pointed out that in addition to the warring Russia and Ukraine, 14 countries including Indonesia, India, Argentina, Algeria and Egypt have banned food exports, including wheat, palm oil and other commodities. High food protectionism concerns.
 
In addition, the English-language news website Quartz also quoted data from the International Food Policy Research Institute on May 17, saying that as of early April, as measured by calories traded, national food export restrictions have affected the world. 17% of food products, and with India's wheat export ban, this figure will increase significantly.
 
The International Food Policy Research Institute warned that if the war between Russia and Ukraine continues, the crisis of global food shortages will intensify, and more countries may implement food export bans.
 
Ban drives down Indian wheat prices, hurts farmers
On the other hand, India's sudden ban on wheat exports means that most of the newly produced wheat crops will remain for sale in India, which will lead to a drop in wheat prices in the Indian market and hurt Indian farmers.
 
A Narayanamoorthy, senior professor and head of the Department of Economics and Rural Development at Alagappa University, India, wrote an article in the Indian media "The Hindu Business Line" on May 18, pointing out that , "the export ban will depress market prices ... hurt farmers", he went on to point out that "for the long-term supply gap due to the Russian-Ukrainian war, there is an opportunity for farmers who sell wheat at more than the (government-provided) minimum support price (MSP) to come to Said, (the ban) would be a huge blow."
 
Ban on wheat exports could push up rice, livestock prices
Second, India's ban on wheat exports could push up the price of rice, a common substitute for wheat, and also raise prices for livestock products.
 
Taking the Philippines, which imported wheat from Ukraine to India after the outbreak of the Russian-Ukrainian war, as an example, India's ban on wheat exports may prompt people to switch to white rice, resulting in increased demand and higher prices for rice.
 
Fermin D. Adriano, undersecretary for policy, planning and research at the Philippine Department of Agriculture, was quoted by India's Businessworld magazine on May 23 as saying, "India's ban on wheat exports may lead to a Countries turn to white rice, which will lead to increased demand and higher prices for white rice."
 
Moreover, India's wheat ban will also create a shortage of low-quality wheat used to make animal feed, affecting the livestock industry, including pigs and poultry.
 
Deputy Agriculture Secretary Adriano pointed out: "(The Philippines) produces about 3 million metric tons of wheat feed a year to fill the gap in livestock feed. If there is insufficient supply, the animal feed industry will be hit, and the cost of input animal feed will increase, and the associated Push up the prices of livestock products.”
 
The U-turn in India's wheat export policy will not only exacerbate supply shortages in the global wheat market, hurt Indian farmers and push up the prices of related products, but may also make the food crisis more urgent in the second half of this year.