Indian wheat was alleviating the food crisis. Then exports were banned

New Delhi
CNN Business
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a month ago, p Russia’s war in Ukraine Push the world to the edge of a food crisis, India Prime Minister Narendra Modi has offered to help countries facing shortages.

“We already have enough food for our people but it seems our farmers have made arrangements to feed the world,” Modi said. She said in April. “We are ready to send relief from tomorrow itself.”

The second largest wheat producer in the world after China The conversation was really easy. In the 12 months to March, India benefited from higher global prices, exporting Record 7 million metric tons of cereals. That was 250% higher than the previous year’s volumes. It also set record export targets for next year.

Now, those lofty goals of exporting wheat have been abandoned forbidden As life threatening heat waves in south asia Undermining production and pushing domestic prices to record levels.

The move shocked international markets on Monday – more since it came just days after India reassured the world that it was unprecedented. A hot wave no Effect its export plans. Global wheat prices rose 6%, with futures trading in Chicago at $12.4 a bushel, the highest price in two months. Tuesday’s wheat futures eased slightly but are still nearly 50% higher since the war began.

While India is a huge producer of wheat – as of this year the country is expected to produce more than 100 million metric tons – most of the grain is used to feed its 1.3 billion people. By the government’s own admission, the country”Not among the top ten wheat exporters.

But the warning caused by the export ban highlights the fragility of the global food supply.

Russia’s invasion of Ukraine have contributed to historical shock to commodity markets that will keep world prices high until the end of 2024, the World Bank said last month. It added that food prices are expected to rise by 22.9% this year, driven by a 40% increase in wheat prices.

This is because Ukraine and Russia are together the account For about 14% of world wheat production, and about 29% of total wheat exports. Vital Charges Of agricultural exports, including an estimated 20 million tons of grain, is stuck in Ukraine because Odessa and its other Black Sea ports are besieged by Russian forces.

Ukraine is among the top five global exporters of a variety of major agricultural products, including corn, wheat, and barley, according to the U.S. Department of Agriculture. It is also the main source of both sunflower oil and meals.

But the food situation was tense even before the fighting began in Europe. Crowded supply chains and unpredictable weather patterns – often as a result of climate change – have already pushed food prices to their highest level in nearly a decade. Affordability has also been an issue after the pandemic has left millions out of work.

The number of people on the brink of starvation jumped to 44 million from 27 million in 2019, according to the United Nations World Food Program He said in March.

Following Modi’s promise, many vulnerable nations were dependent on supplies from India.

Indian wheat exports It’s particularly significant this year against the backdrop of the Russia-Ukraine crisis, Oscar Tjakra, senior grain and oilseed analyst at Rabobank, told CNN Business.

“The ban will reduce the availability of global wheat for export in 2022 and will provide support for international wheat prices,” he added.

The shift in New Delhi’s wheat policy has already been countered Criticisms from G7 memberswhich is an organization of some of the largest economies in the world.

On Monday, Ambassador Linda Thomas Greenfield, the US representative to the United Nations, said she hoped Indian authorities would “reconsider this situation.”

“We encourage countries not to restrict exports because we believe any export restrictions will exacerbate food shortages,” She said at a press conference in New York.

India responded by saying that the restrictions are necessary for its food security and also to keep prices under control. Annual inflation in Asia’s third-largest economy hit its highest level in nearly eight years in April, a development some traders say Caused an export ban.

The government also said the restrictions do not apply “in cases where prior commitments have been made by private traders”, and countries requesting supplies “to meet food security needs”.

According to Tagkra, these exceptions should be considered “good news,” but they make it difficult to assess the impact of the ban on global trade.

He added that the “severity of the impact” of the ban “will still depend on the volume of Indian wheat exports that are still permitted at the government level and the volume of wheat production from other global wheat producers.”

Some analysts in India say allowing unrestricted exports was a bad idea in the first place.

“We don’t know what will happen to the climate in India,” Devinder Sharma, an expert on agricultural policy in India, told CNN Business.

India is among the countries expected to be most affected by the effects of the climate crisis, according to the United Nations body on climate change, the Intergovernmental Panel on Climate Change (IPCC).

Sharma added that if crops are devastated by unpredictable weather, food may be in short supply in India, and she is left “standing with a begging bowl”.

India is not the only country looking inward and restrictions on agricultural exports.

In April, Indonesia began to restrict exports Palm oilIt is a common ingredient found in many foodstuffs, cosmetics and household items in the world. It is the largest producer of the product in the world.

Just a month ago, Egypt Exports of staple foods such as wheat, flour, lentils and beans have been banned amid growing concerns about food reserves in the Arab world’s most populous country.

“With inflation already rising in Asia, risks are skewed towards more food protectionism, but these measures may ultimately exacerbate food price pressures globally,” Nomura analyst Sonal Varma said in a note on Saturday.

It added that the impact of India’s ban on wheat exports would be “disproportionately felt by low-income developing countries”.

Nomura said Bangladesh is India’s top wheat export destination, followed by Sri Lanka, the United Arab Emirates, Indonesia, Yemen, the Philippines and Nepal.