India has banned wheat exports with immediate effect, citing a risk to food security, in part because of the war in Ukraine and a scorching heat wave that has cut output and domestic prices hit a record.
Though not one of the world’s top wheat exporters, India’s ban could push world prices to new highs as supply is already tight, hitting poor consumers in Asia and Africa particularly hard.
Agriculture ministers from the G7 industrialized nations immediately condemned India’s decision on Saturday.
“If everyone starts imposing export restrictions or closing markets, that would make the crisis worse,” German Agriculture Minister Cem Ozdemir told a news conference in Stuttgart.
“We call on India to shoulder its responsibility as a member of the G20,” Ozdemir said.
Government officials in New Delhi said on Saturday that India would still allow exports backed by letters of credit already issued and to countries requesting supplies “to meet their food security needs.”
The ban would not be in perpetuity and could be reviewed, officials said at a news conference.
A rise in world wheat prices threatened the food security of India and neighboring and vulnerable countries, India’s Directorate of External Trade said in a notice in the government gazette dated Friday.
Although there was no dramatic drop in India’s wheat output this year, government officials said unregulated exports had led to a surge in local grain prices.
“We don’t want the wheat trade to be carried out in an unregulated way or hoarding to happen,” Commerce Secretary BVR Subrahmanyam told reporters in New Delhi.
Wheat prices in India have risen to record highs, in some spot markets reaching Rs 25,000 ($320) per tonne, well above the government’s minimum support price of Rs 20,150 ($260).
“It wasn’t the wheat alone. The increase in general prices raised concerns about inflation and that is why the government had to ban wheat exports,” another senior government official who asked not to be named because discussions about export restrictions were private.
“For us, it’s a lot of caution.”
‘Ban is shocking’
“The ban is shocking,” said a Mumbai-based distributor for a global trading company.
“We expected restrictions on exports after two or three months, but it seems that the inflation figures changed the government’s mind,” the trader said.
Rising food and energy prices pushed India’s annual retail inflation near an eight-year high in April.
India’s wheat crop has also been hit by an unprecedented heat wave that is stunting output. In addition to weather that damaged crops, India’s vast stocks of wheat, a buffer against famine, have been affected by the free distribution of grain during the COVID-19 pandemic to some 800 million people.
India’s move comes as world agricultural markets are under severe pressure due to Russia’s invasion of Ukraine.
Ukraine, a traditional global breadbasket, has seen shipments disrupted, with the Ukrainian agriculture minister traveling to Stuttgart to discuss with G7 colleagues how to get their produce out.
Before the Russian invasion, Ukraine exported 4.5 million tons of agricultural products per month through its ports: 12% of the planet’s wheat, 15% of its corn and half its sunflower oil.
But with the ports of Odessa, Chornomorsk and others cut off from the world by Russian warships, supplies can only travel through congested land routes that are much less efficient.
Some “20 million tonnes” of wheat are currently in Ukrainian silos and “urgently” need to be exported, German Minister Ozdemir said, adding that the G7 “spoke out against stoppages and calls for export as well.” to keep the markets open.
He urged countries around the world not to take restrictive measures that could put more stress on agricultural product markets.