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Wheat Crisis Explained: What Led To India’s Export Ban, Will Prices Fall Now?

Wheat Crisis Explained: What Led To India’s Export Ban, Will Prices Fall Now?
Written by bobby
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The government has banned the export of wheat with immediate effect in order to control food prices in the domestic market. The daily average retail price of wheat has increased 19.34 per cent to Rs 29.49 per kg on May 9, compared with Rs 24.71 per kg a year ago. Here’s why the government has banned wheat export and whether its prices will come down now:

Why Has The Govt Banned Wheat Export?

According to the consumer affairs, food & public distribution ministry, the decision to restrict wheat exports will control food prices, strengthen the food security of India and countries facing a deficit, and that India remains a reliable supplier as it is honouring all contracts.

International wheat prices have been going up. Since the beginning of the Russia-Ukraine war, global wheat prices have so far increased over 40 per cent. Before the war, Ukraine and Russia accounted for a third of global wheat and barley exports. Wheat from other countries was selling as high as USD 420-480 per tonne.

Food Secretary Sudhanshu Pandey has said retail prices of wheat and wheat flour in India have risen in the past year by up to 19 per cent, and the government’s decision to ban wheat export is expected to cool down the domestic prices in a week or so.

The daily average retail price of wheat has increased by 19.34 per cent to Rs 29.49 per kg on May 9 compared with Rs 24.71 per kg in the year-ago period. Similarly, retail atta prices have shot up by 14.27 per cent to Rs 32.91 per kg from Rs 28.8 per kg in the comparable period, according to a report by news agency PTI quoting Joint Secretary in the Food Ministry Subodh Kumar.

In the wholesale market too, the daily average price of wheat rose 21.55 per cent to Rs 25.82 per kg on May 9 compared with Rs 21.24 per kg in the year-ago period, while atta price rose 15.88 per cent to Rs 27.89 per kg from 24.06 per kg in the comparable period, the report added.

The country’s wheat production has been revised lower to 105-106 million tonnes for the 2022-23 crop year (July-June) from an earlier estimate of 111 million tonnes, due to heatwave, especially in northwestern India.

Pandey has said the decision will definitely help in softening the prices. However, it will not be possible to predict how much prices will fall. “But, the domestic prices will no doubt cool down in a week or so,” he said on the sidelines of the press conference.

The food secretary has said, as reported by PTI, “Global demand was rising and different countries were putting restrictions. Sentiments were driving prices. We are quite confident, now also the sentiments will push down the prices.”

Is there Any Exemption?

The ban has some exemptions. The government has allowed wheat shipments with valid irrevocable letters of credit (LoC) issued on or before the date of the notification. The country has contracted for the export of 4.5 million tonnes of wheat so far this fiscal. Out of which, 1.46 million tonnes was exported in April, as per the official data.

The government said that exports could still take place if New Delhi approved a request by other governments “to meet their food securities needs”. Egypt is in talks with India on the exemption.

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About the author

bobby

Hi, I am Bobby. Blogger India. I love writing, and reading articles. Blogging is my passion. I have started my blogging career in 2016.

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