In an announcement made Friday late evening, Indian authorities banned wheat exports after domestic prices went up. Local retailers decided on the increase after the wheat supplies went down following a heatwave that caused farmers to yield less.
India exports millions of tonnes of wheat every year, with global traders depending on the regular shipment made by the country. Today, India is considered the second-largest wheat exporter in the world.
Due to high demand, the Indian wheat exporting industry has planned to ship over 10 million tonnes of wheat this year. However, taking the recent happenings into account, the plan may be jeopardized.
Despite the ban, Indian authorities said they will not turn back on the countries that need the supply the most. At the same time, they will ship out wheat to buyers who have already signed with the country’s dealers prior to the ban.
After the invasion of Russia to Ukraine, the wheat supply chain was disrupted, leaving many countries depending on India’s wheat export, the second-largest globally.
The immediate ban was “shocking,” says a Mumbai-based dealer. The dealer further stated that this raises concerns regarding the plans of the Indian wheat market to curb the high demands of exports within 2-3 months. “[It] seems inflation numbers changed government’s mind,” he said.
In the local markets of India, prices skyrocketed. In several states, wheat prices have gone up to 25,000 Rupees or roughly $322, a big difference from the government’s suggested retail price of 20,150 rupees.
Local crop hurt by heatwave, prices went up
In a report last April, the India Meteorological Department predicted an increase in average temperatures in India, with some areas reaching 8 degrees Celsius above average. The estimation is twice the requirement of the weather bureau in declaring the status of a heatwave (4 degrees Celsius above average).
Experts said that the heat came in early, compared to past years where the hottest were in the summer months of April, May, and June. The unexpected shift in the climate poised problems in crop production and health. According to the weather bureau, March was the hottest since 1901.
Vimal Mishra, an expert at the Indian Institute of Technology’s Water and Climate Lab, warned that the incoming heatwaves would affect more states of India as months go by. “They are unavoidable and will occur more frequently,” Mishra said.
The current developments hampered the many plans of the government. Recently, India expressed interest in sending delegations to several countries to talk about possible export opportunities. Areas of interest include the Philippines, Morocco, Indonesia, and Tunisia.
Farmers said they harvested smaller wheat quantities as the heatwave ‘shrunk’ their crops. However, the government was quick to implement the ban saying that it would help ease the increasing local market prices and prevent further conflict.
As of late, wheat buyers and dealers remain hopeful that the ban will be lifted as soon as possible.
Opinions expressed by US Insider contributors are their own.
