The government of India on Saturday announced policies to manage overall food security of the country and support neighboring and vulnerable countries. The world’s second-biggest wheat grower mostly prohibited exports, saying that the nation’s food security is under threat.
Exports will still be allowed to countries that require wheat for food security needs and based on the requests of their governments, India’s Directorate General of Foreign Trade said in a notification dated May 13. All other new shipments will be banned with immediate effect. Link for details.
The ban has been imposed to divert wheat supplies to the needy and vulnerable people, Commerce Secretary B.V.R. Subrahmanyam said. Shipments with irrevocable letters of credit that have already been issued will still be allowed, according to a notification. India is likely to sell 1.1 million tons of wheat in May, he added. Indian traders have so far contracted to export 4.5 million tons of wheat in 2022-23, according to the food ministry. The nation shipped 1.46 million tons of wheat and 95,167 tons of wheat flour in April, it said. The country previously targeted to export a record 10 million tons in 2022-23.
Local prices of wheat have risen sharply as India has stepped up exports of the cereal following a major rally in global rates in the wake of the Russia/Ukraine conflict and as exporters sped up shipments, anticipating curbs by the government.
The wheat crop was damaged during India’s hottest March on record, causing yields to potentially slump by as much as 50% in some pockets of the country. The Indian government recently lowered its wheat production estimate by 5.7% to 105 million metric tons for the crop year ending June. The government had earlier projected wheat production at a record of about 111 million tons, which would have made it the sixth season in a row to produce a surplus. India produced nearly 110 million tons of wheat in the previous crop year.
In an online briefing, RBI governor Shaktikanta Das said inflation pressures are becoming more acute, particularly on food. Retail prices for wheat rise around 7% from a year earlier. And flour made from the grain traded rose 8% from last year, according to government data.
For details on how India’s export ban is impacting the markets, listen to Joe Vaclavik’s commentary.
