India bans wheat exports amid increasing annual inflation

India bans wheat exports amid increasing annual inflation

 

Wheat prices in India have reached record highs amid growing inflation. In many places, it has touched the mark of Rs25000 per tonne.

On Saturday, India imposed a ban on its wheat exports. Just a few days ago, the administration said its target was to export record shipments in 2022. But, due to extreme heatwaves, the wheat output of the country was curtailed by a large number`. It increased domestic prices to an all-time high.

The officials said they would still export wheat to the countries, which are in dire need to fulfill their food requirements. Also, they will have to export wheat for already sanctioned lines of credit.

Global wheat buyers looked upon India for the supplies after the exports plunged from the Black Sea region. India is the world’s second-largest producer of wheat. After the Russian invasion of Ukraine, there has been a shortage in wheat supply across the globe. Before imposing this ban, India aimed to export around 10 million tons of wheat this year.

Although India is not the largest exporter of wheat, this ban could increase the prices to a new peak level. Already the supply is going through an acute shortage, hitting the poor people in Africa and Asia.

A Mumbai-based dealer said that the ban comes as a shock to the global trading firms. He added that traders were expecting the ban after 2-3 months, but the rising inflation seems to change everything.

Increasing energy and food prices pushed the annual retail inflation of the country to an 8-year high in April. People started speculating that the central bank would further increase the interest rates aggressively.

In India, wheat prices have reached a record high. In some places, it has hit Rs25000 per ton. This mark is much more than the set minimum support price of Rs20,150 by the government.

Increasing labor, fuel, packaging, and transportation costs have raised inflation concerns. It is the reason, the government decided to ban wheat exports. A senior government official mentioned that wheat is not alone.

He added that it is a time of caution for the government.

Last week, India planned its export targets for this fiscal year which started on April 1, 2022. The administration was to send trade delegations to the Philippines, Indonesia, Tunisia, and Morocco to explore more shipment ways.

The government forecasted the production of 111.32 million tons of wheat in February. But, now it has reduced to only 105 million tons.

Higher than usual temperatures in March 2022 have further declined the production to 100 million tons. A New Delhi-based trader informed the media that it could still come down.

Moreover, the government is procuring 50% lesser wheat this year. The supplies in the spot market have decreased drastically compared to the previous year. All these things indicate lower crop yield.

After the Russian invasion of Ukraine in February 2022, India exported around 7 million tons till March. It is way more than 250% from the last year.

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