Bloomberg – India is considering restricting its wheat exports as severe heat waves damage crops, tightening global supplies in the wake of the war in Ukraine and triggering food inflation.
The South Asian country recorded its hottest March, with the wheat crop withering as the world relied on to reduce global shortages. To protect domestic supply, the government is considering restricting wheat exports. According to a person who knew the matter.
Senior officials will consult on the move and make a recommendation to Prime Minister Narendra Modi, who will then make a decision, asking that person not be identified as the information is private.
A spokesman for the Ministry of Agriculture was not immediately available for comment. A Finance Ministry spokesman did not respond to a request for comment, while the Commerce Ministry did not immediately respond to a request for comment. Benchmark wheat futures rose nearly 4% in Chicago.
Restricting exports would be a blow to India’s ambition to take advantage of the resurgence in global wheat prices following Russia’s invasion of Ukraine, which has disrupted trade flow from the vital Black Sea region. Importing countries looked to India for supply, and Egypt, a major buyer, recently recognized South Asia as the birthplace of wheat imports.
The move will fuel a wave of crop protectionism around the world as governments seek to protect their own food amid fears of rising prices and shortages. This could worsen global food inflation, which has already reached record levels and is rising at an astounding pace.
One of the strategies is to set a minimum export price so that wheat cannot be exported below this level. In this way, without banning it altogether, the government would be able to increase supply domestically and keep prices under control on an individual basis.
The Food Ministry on Wednesday reduced India’s wheat production estimate for the season to 105 million tonnes. This figure is lower than the previously estimated 111 million tonnes and 109.6 million tonnes produced a year ago.
Food Secretary Sudhanshu Pandey told a conference that there was no need to restrict exports as there was enough supply in the country to meet domestic demand.
The decline in production raises fears for the domestic market as millions of people rely on agriculture as their main source of livelihood and food. The decline in production will affect the income of farmers. The government also buys wheat for its welfare program, which provides subsidized food to two-thirds of the population.
The central bank raised its key interest rate by surprise on Wednesday, slashing bonds and stocks, as a sign that Indian officials are worried about rising inflation. Prolonged inflationary pressures, especially on food items, are intensifying, Governor Shaktikant Das said at an online conference, adding that prices “are at risk of staying at this level for too long”.
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