A month ago, as Russia’s war in Ukraine brought the world to the brink of a food crisis, Indian Prime Minister Narendra Modi offered to help countries facing shortages.
“We already have enough food for our people, but our farmers seem to have made arrangements to feed the world,” Modi said in April. “We are ready to send relief starting tomorrow.”
The world’s second largest wheat producer after China wasn’t kidding. In the 12 months to March, India profited from rising global prices, exporting a record 7 million tonnes of the grain.
This was over 250% over the previous year’s volumes. It had also set record export targets for the next year.
Now those lofty targets have been abandoned and wheat exports banned as life-threatening heat waves in South Asia cripple production and push local prices to record levels.
The move shocked international markets on Monday – all the more so as it came just days after India assured the world that the unprecedented heat wave would not affect its export plans.
Global wheat prices rose 6%, with futures trading in Chicago hitting $12.4 a bushel, the highest price in two months.
Wheat futures fell slightly on Tuesday, but are still up nearly 50% since the start of the war.
Although India is a major producer of wheat — this year, the country is expected to produce more than 100 million tonnes — most of the grain is used to feed its population of 1.3 billion.
By the government’s own admission, the country “is not among the top 10 wheat exporters.”
But the alarm caused by its export ban underscores the fragility of the global food supply.
How did we get here?
Russia’s invasion of Ukraine has contributed to a historic shock to commodity markets that will keep global prices high until the end of 2024, the World Bank said last month.
Food prices are expected to rise 22.9% this year, driven by a 40% rise in wheat prices, he added.
That’s because Ukraine and Russia together account for about 14% of global wheat production and about 29% of all wheat exports.
Vital shipments of agricultural exports, including some 20 million tonnes of grain, are stranded in Ukraine because Odessa and its other Black Sea ports were blocked by Russian forces.
Ukraine is among the top five global exporters of a variety of important agricultural products, including corn, wheat and barley, according to the US Department of Agriculture.
It is also the main exporter of sunflower oil and meal.
But the food situation was tense even before the fighting in Europe began.
Tangled supply chains and unpredictable weather patterns – often the result of climate change – have already driven food prices to their highest level in about a decade.
Affordability was also an issue after the pandemic left millions out of work.
The number of people on the brink of hunger jumped to 44 million from 27 million in 2019, the UN World Food Program said in March.
After Modi’s pledge, many vulnerable countries were betting on supplies from India.
“Indian wheat exports are especially important this year due to the Russia-Ukraine crisis,” Oscar Tjakra, senior grain and oilseed analyst at Rabobank, told CNN Business.
The “ban will reduce the global availability of wheat for export in 2022 and provide support for global wheat prices,” he added.
New Delhi’s political turnaround on wheat has already been met with criticism from members of the G7, an organization of some of the world’s biggest economies.
On Monday, Ambassador Linda Thomas-Greenfield, the US Representative to the United Nations, said she hoped Indian officials would “reconsider this position”.
“We are encouraging countries not to restrict exports because we think any restrictions on exports will exacerbate food shortages,” she told a news conference in New York.
food protectionism
India responded by saying the restrictions are essential for its own food security and also for keeping prices under control.
Annual inflation in Asia’s third-largest economy hit its highest level in nearly eight years in April, a development that some analysts say triggered the export ban.
The government also said the restrictions do not apply “in cases where previous commitments have been made by private traders” and to countries requesting supplies “to meet their food security needs”.
According to Tjakra, these exceptions should be considered “good news” but make it difficult to assess the impact the ban will have on global trade.
The “severity of the impact” of the ban “will still depend on the wheat export volumes from India that are still allowed at the government level and the wheat production volumes of other global wheat producers,” he added.
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 agricultural policy expert from India, told CNN Business .
India is among the countries most affected by the impacts of the climate crisis, according to the UN climate change authority, the Intergovernmental Panel on Climate Change (IPCC).
If crops are ruined because of unpredictable weather, India could run out of food and be left “with a begging bowl,” Sharma added.
India is not the only country that is restricting agricultural exports.
In April, Indonesia began restricting exports of palm oil, a common ingredient found in many of the world’s foods, cosmetics and household items. It is the world’s largest producer of the product.
Just a month earlier, Egypt had banned exports of staple foods such as wheat, flour, lentils and beans, amid growing concerns over food reserves in the Arab world’s most populous state.
“With inflation already high in Asia, risks are skewed towards more food protectionism, but these measures could end up exacerbating pressures on food prices globally,” Sonal Varma, an analyst at Nomura, said in a note on Saturday.
She added that the impact of India’s wheat export ban “will be felt disproportionately by low-income developing countries.”
Bangladesh is India’s top wheat export destination, followed by Sri Lanka, the United Arab Emirates, Indonesia, Yemen, the Philippines and Nepal, Nomura said.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
