Why does India’s export ban matter to the rest of the world?

Why does India’s export ban matter to the rest of the world?

Web Desk
June 6, 2022

Why does India’s export ban matter to the rest of the world?

Following concerns that its decision to limit wheat exports could worsen the global food supply situation in the aftermath of the Ukraine war, India has defended its stance.
Embargo was announced in India on May 13th, after extremely hot weather damaged the wheat crop, sending local prices skyrocketing.

Following concerns that its decision to limit wheat exports could worsen the global food supply situation in the aftermath of the Ukraine war, India has defended its stance.

“If everyone starts to impose export restrictions… that would worsen the crisis,” German Food and Agriculture Minister Cem Ozdemir said after the embargo was issued in May.

However, India’s Commerce Minister, Piyush Goyal, claims that the export ban should have no effect on world markets because the country is not a large wheat exporter.

So, what effect has India’s move had?

The embargo was announced in India on May 13th, after extremely hot weather damaged the wheat crop, sending local prices skyrocketing.

Despite the fact that India is not a large wheat exporter, the action shook global markets, with the Chicago benchmark wheat index surging nearly 6%.

Wheat prices climbed for many days, reaching a high on the 17th and 18th of May.

Wheat prices, like other food costs, had surged throughout March and April following Russia’s invasion of Ukraine.

Because of the disruption caused by the war, millions of tonnes of wheat have been unable to leave Ukraine, one of the world’s largest exporters.

According to Kelly Goughary of the farm data analysis firm Gro Intelligence, India’s prohibition caused a further price increase since “global customers were relying on supply from India after exports from the Black Sea region plummeted.”

Although India is the world’s second largest wheat producer, it accounts for less than 1% of global wheat commerce. It keeps a large portion of it to subsidise food for the poor.

However, just before the ban was announced, India was aiming to increase exports by shipping a record 10 million tonnes of wheat this year, up from two million the previous year.

It was supplying new markets in Asia and Africa, and even after the prohibition, numerous governments indicated they were in contact with India to maintain exports.

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