Global wheat prices surged on Monday after India announced to limit its wheat exports, as fallout from the Russia-Ukraine war continues to reverberate.
Although not one of the world’s top wheat exporters, a ban on the commodity by the Indian government could drive global prices to new peaks given the already tight supply. This would particularly hit the poor consumers in Asia and Africa hard.
G7 Agriculture ministers condemned India’s decision
Agriculture ministers from the G7 industrialized nations were quick to condemn the Indian decision to limit its wheat export.
“If everyone starts to impose export restrictions or to close markets, that would worsen the crisis,” German agriculture minister Cem Ozdemir said at a news conference in Stuttgart on Saturday. “We call on India to assume its responsibility as a G20 member,” he added.
Wheat ban will help avoid hoarding
Government officials in New Delhi said on Saturday that India would still allow exports backed by already issued letters of credit and to countries that request supplies “to meet their food security needs”. The ban would not be in perpetuity and could be revised, the officials told a news conference.
“We don’t want wheat trade to happen in an unregulated manner or hoarding to happen,” commerce secretary BVR Subrahmanyam told reporters in New Delhi.
Wheat prices in India
Although India’s wheat output remained around expectations this year, government officials said that unregulated exports had led to a rise in local prices for the grain. Wheat prices in India have risen to record highs, in some spot markets hitting 25,000 rupees per tonne, well above the government’s minimum support price of 20,150 rupees per tonne.
“It was not wheat alone. The rise in overall prices raised concerns about inflation and that’s why the government had to ban wheat exports,” another senior government official told media on condition of anonymity.
War in Ukraine led to global wheat crisis
Ukraine is one of the world’s leading what exporters. Before the Russian invasion, Ukraine exported 12% of the planet’s wheat per month. The country also used to export 15% of its corn and half of its sunflower oil, prior to the war. But the typical global breadbasket from Ukraine has seen significant shipment disruptions since the Russian invasion in February.
Some “20 million tonnes” of wheat is currently sitting in Ukrainian silos and “urgently” needed to be exported, the German minister, Ozdemir, said, adding that the G7 “spoke out against export stops and call, as well for markets to be kept open”. He urged other countries to avoid taking restrictive actions on wheat export as this could pile further stress on the produce markets.
The Ukrainian agriculture minister is traveling to Stuttgart for discussions with G7 colleagues about getting its agriculture produce out. But with the Odesa, Chornomorsk, and other ports cut off by Russian warships, the only supply route open is the congested land route, which is much less efficient.