DNA Explainer: How world is reacting to wheat export ban by India amid Ukraine war

Amid the rising domestic wheat price, India on Saturday announced a ban on wheat exports with immediate effect. India, the world's second largest wheat producer banned export citing a risk to food security. Earlier, reports suggested that the monthly average retail price of wheat flour touched Rs 32.38 per kg in April, the highest in over 12 years. 

The risk of wheat shortage in the country, to some extent is due to the ongoing Russia Ukraine war and the scorching heatwave which curtailed output and domestic prices hit a record high. Global wheat prices have risen by more than 40% since Russia invaded Ukraine in the beginning of this year. Before the war, Ukraine and Russia accounted for a third of global wheat and barley exports.

Read | After 8-year high annual inflation in April, domestic prices to soar amid wheat exports ban in India

Why did India decide to halt exports?

Because of low production of the wheat crop this year, the food security of India and vulnerable countries is at risk.

India's Directorate of Foreign Trade said in a notice in the government gazette dated Friday, May 13, 2022.

The scorching heatwave in India this year has led to the curtailed output of wheat crop in the country. 

The risk of wheat shortage in the country, to some extent is also due to the ongoing Russia Ukraine war.

The world's second-biggest wheat producer, India is trying to calm local prices which have hit a 12 years high.

There was no big fall in India's wheat output this year, but government officials say unregulated exports had led to a rise in local prices.

"We don't want wheat trade to happen in an unregulated manner or hoarding to happen," commerce secretary BVR Subrahmanyam said.

India's vast stocks of wheat have been strained by the distribution of free grain during the Covid-19 pandemic to some 800 million people.

India has said it would still allow exports of wheat for letters of credit that have already been issued.

India would also allow exports on the request from countries that are trying 'to meet their food security needs'.

In April, India exported a record 1.4 million tonnes of wheat and deals were already signed to export around 1.5 million tonnes in May.

Wheat prices have risen to record high, in some spot markets hitting Rs 25,000 per tonne, well above government's MSP of Rs 20,150.

The wheat export ban would not be in perpetuity and could be revised, the officials told a news conference.

How world reacted?

Global buyers were banking on India for supplies after exports from the Black Sea region plunged due to war.

Agriculture ministers from the G7 industrialised nations immediately condemned India's decision on Saturday.

"If everyone starts to impose export restrictions or to close markets, that would worsen the crisis," German agriculture minister said.

India's ban could drive global prices to new peaks given already tight supply, hitting poor consumers in Asia and Africa particularly hard.

Ukraine, a traditional global breadbasket, has seen shipments disrupted due to Russian invasion of the country.

Before the Russian invasion, Ukraine exported 4.5 million tonnes of agricultural produce per month through its ports, 12% of world's wheat.

Some 20 million tonnes of wheat is currently sitting in Ukrainian silos and urgently needed to be exported, German minister Ozdemir, said.

Egypt, one of the world's top wheat importers, said Sunday that its government purchases are exempt from the curbs.

It has agreed to buy 500,000 tons of wheat from India, which it recently approved as an origin for imports.