Wheat confusion: On India’s export restriction

Apprehensions of shortage in India are misplaced, and the Government must allow export

Updated - May 23, 2022 09:19 am IST

Published - May 23, 2022 12:20 am IST

India, which surprised the world with its decision to bar wheat export with immediate effect, appears to be on the defensive now after its May 13 announcement. Initially, the Centre had amended the order by allowing export consignments registered in the Customs Department’s systems and handed over for examination on or prior to May 13. Addressing a UN “Global Food Security Call to Action” ministerial meeting a few days ago in New York, Minister of State for External Affairs V. Muraleedharan emphasised that the restrictions made allowance for countries that had food security needs, a position articulated earlier by Commerce Secretary B.V.R. Subrahmanyam. But, more than farmers, it is traders who stand to benefit from the limited easing of restrictions. From the start, indications of a mismatch in demand and supply were evident. Rising levels of wholesale and retail inflation, the impact of the Russia-Ukraine war and a lower opening balance of wheat (on April 1, 2022) in the Central pool for the public distribution system than a year ago were well known. After several parts of wheat-producing States in the north experienced unusually warm weather in March-April, the Government lowered marginally, early this month, the estimated wheat production, from 111.32 million tonnes to 105 million tonnes. As for international food prices, the Food and Agriculture Organization of the United Nations, said that even before the war, prices had reached an all-time high due to market conditions and the high prices of energy, fertilizers and other agricultural services. By May 4, the Centre clarified that there was no move to curb wheat export, the reasoning being that this was the opportune moment for exporters to sell in the international market as wheat from Argentina and Australia would begin arriving next month. The higher prices in the domestic market compared to the minimum support price offered by the Government were projected as favourable for farmers. Also, just days before the Government’s decision, an official announcement was made that trade delegations would be sent to countries such as Morocco, Tunisia, and Indonesia to explore possibilities for wheat export. In addition to Egypt, Turkey had given its approval for the import of Indian wheat, and an announcement had been made that the current year’s target for wheat export had been fixed at 10 million tonnes, three million tonnes higher than last year.

India’s decision has faced criticism from the G-7’s Agriculture Ministers. After its U-turn, the Government should not persist for too long with its current position of “restrictions” on the export of wheat, as the move seems to have hit the farmers, if reports of a fall in the price are any indication. Lessons must be gleaned from the experience 15 years ago when India took about two years to lift its ban on the export of non-basmati rice, by which time Thailand and Vietnam had moved in to take full advantage. Apprehensions of a food shortage are misplaced, and the Government would do well to lift the “restrictions” sooner rather than later.

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