NEW DELHI – India has said it will ban wheat exports, which will lead to global inflationary pressures and further complicate global food supplies that have been disrupted by the war in Ukraine.

“The food security of India, neighboring and other vulnerable countries is under threat,” the Indian Foreign Trade Directorate said in a statement on Friday, explaining the ban.

World buyers depend on supplies from India, the world’s second-largest wheat producer, after supplies from the Black Sea region fell after Russia’s invasion of Ukraine in late February. The United Nations has warned that the world is facing a possible food shortage.

Interruptions due to the crisis have led to rising prices for wheat and other commodities around the world. In April, wheat prices in India reached their highest level since 2010. After five years of severe harvests, a wave of heat and lack of rain reduced yields. Authorities say rising prices have led to the accumulation of some wheat traders.

Last week, the Indian government lowered its estimate of wheat production by 5.7% to 105 million tonnes for the harvest year ending in June. Earlier, the government predicted wheat production at a record level of about 111 million tons, which would allow for the sixth consecutive season to produce a surplus. India produced nearly 110 million tonnes of wheat in the previous crop year.

“It’s all because of the beginning of summer,” said Indian Food Minister Sudhanshu Pandi last week.

India has experienced the hottest March and April for more than 100 years, leading to a 6% loss in yield, Mr Pandi said, among which the most affected states are Punjab, Haryana, Madhya Pradesh and Uttar Pradesh. You will pass. .

India is a major supplier of wheat to its neighbors. Afghanistan recently received large consignments of wheat from India for humanitarian reasons. Bangladesh is another major importer of Indian wheat.

India has said exports will still be allowed to countries that need wheat for food security. The shipment of wheat under the already issued letters of credit will also be allowed, the General Directorate of Foreign Trade said.

The Indian government has lowered its estimate of wheat production for the current crop year, which lasts until June.


Photo:

Chani Anand / Associated Press

This year about 4 million tons of wheat have been contracted for export, by April – about 1.1 million tons.

Vikram Singh, joint secretary of the All India Trade Union of Agricultural Workers, said the ban on wheat exports would not prevent the accumulation of private traders. “They will continue to accumulate huge profits in domestic and international markets amid high wheat prices,” he said.

India’s agricultural policy – especially its policy of setting minimum prices to subsidize farmers – has long been controversial with developed countries, such as the Indian government, which says the country needs the unimpeded ability to subsidize its farmers and stockpile food for its needy and malnourished. citizens as well as a buffer against the risk of hunger.

As of May 1, wheat stocks in state warehouses amounted to 30 million tons. India says it needs at least 25 million tonnes of wheat each year to meet its food welfare program. Mr Pandi said that after meeting the requirements of welfare programs India will have stocks of 8 million tonnes of wheat, which is above the minimum requirements of 7.5 million tonnes.

Before the pandemic in India there was a large surplus of food grains. These surpluses have been strained due to the distribution of free grain during the pandemic to some 800 million people, especially vulnerable groups such as migrant workers and the poor. The program is extended until September.

India’s domestic grain distribution system suffers from problems and inefficiencies. Warehouses in the grain states are sometimes overcrowded, and elsewhere are half-empty. What does not move often rots in storage. Rice and wheat, which reach hundreds of thousands of Indian villages, can be detained in other ways. Local officials are responsible for keeping lists of households and distributing grain to village shops. Accusations of bribery and theft are common in some parts of the country.

Rising prices for food and other goods, partly due to the war in Ukraine, have affected India’s economic recovery after the pandemic, partly as a result of the war in Ukraine. Earlier this month, India’s central bank raised interest rates to 4.40% from 4%, joining other central banks that have begun tightening monetary policy to curb inflation.

Before the pandemic in India there was a huge surplus of food grains.


Photo:

AMIT DAVE / REUTERS

The head of India’s central bank, Shaktikanta Das, told a news conference last week that continued inflationary pressures are becoming more acute, especially in food prices.

Inflation based on the consumer price index rose to 7.8% in April year on year, staying above the target of the Reserve Bank of India for the fourth month in a row, according to data released by the National Bureau of Statistics on Thursday. This was higher than 6.95% in the previous month and 4.23% a year earlier.

Spiral food and fuel prices have made it difficult for consumers, who are already struggling with losses over the two years of the pandemic, to pay household expenses.

Gita Goel, a 47-year-old housewife from New Delhi, said she had switched to buying smaller sizes or cheaper options from conventional brands to save money.

“Suddenly everything went up,” she said. “Even grocery online stores offer almost no discounts. Begins to ache in your pockets. This is a difficult time for us. “

Luv Agarwal, 47, who works as a salesman for a clothing company in Kanpur in northern Uttar Pradesh, said rising prices for daily food and fuel are eating away at his solvency.

He recently moved from his one-bedroom rented apartment to a shared accommodation with two others, saving about 3,000 rupees a month. He also stopped eating out.

“Prices for everything from legumes and wheat flour to fruit and packs of tea have skyrocketed. Where do you cut costs? ” Said Mr. Agarwal.

Write Vibhuti Agarwal at vibhuti.agarwal@wsj.com

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