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India prohibits wheat exports with immediate effect

Following a nearly 40% rise in global rates in the aftermath of the Russia-Ukraine crisis, and also as India ramped up exports, wheat and cereal prices rose in India.

May 14, 2022 / 10:04 AM IST
Representative Image

Representative Image

India has prohibited wheat exports with immediate effect, according to a government notification issued late Friday, as the world's second-largest wheat producer attempts to stabilise domestic prices.

However, export shipments for which irrevocable letters of credit (LoC) were issued on or before the date of this announcement will be approved, according to a May 13 notification from the Directorate General of Foreign Trade (DGFT).

"The export policy of wheat is prohibited with immediate effect," the DGFT said. It also clarified that wheat exports will be allowed on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their governments.

Following a nearly 40% rise in global rates in the aftermath of the Russia-Ukraine crisis, and also as India ramped up exports, wheat and cereal prices rose in India.

The country is expected to face a shortfall of the cereal in the months ahead as produce in the rabi season is expected to be below estimates.

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Furthermore, industry stakeholders indicate that the supply of the produce may further suffer in the months ahead due to yield loses in states like Punjab and Haryana, the top producers of the grain in the country.

Wholesale wheat inflation jumped to 14.0 percent in March, the highest in 63 months. The last time wholesale wheat inflation was higher was in December 2016.

March saw the highest temperatures on record since 1901, shrivelling India's wheat crop during a critical growing period. The scorching heat wave has burnt wheat fields in India, lowering yields and dampening export prospects. This has led to estimates that yields have fallen by 10% to 50% this season.

Companies also indicated that they might hike the price of their products given the stress on margins.

Read: Wheat inflation becoming hard to stomach for Indian households

Asked about the government's move at a press conference on the second day of the Congress' ongoing 'Chintan Shivir', senior leader and former finance minister P Chidambaram said, "I presume that it is because the central government has failed to procure enough wheat. It is not that wheat production has come down, it is more or less the same. In fact, it may be marginally more."

Chidambaram said that on Friday, a Chhattisgarh minister had told him that the government there had procured 97 lakh tonnes of paddy.

If procurement had taken place, there would not have been any need to ban the export of wheat, he said. "But let me add, banning the export of wheat is an anti-farmer measure. It deprives the farmer of reaping the benefits of higher export prices. It is an anti-farmer measure and I am not surprised, this government has never been very friendly to the farmer," Chidambaram said.

Global buyers were banking on India for wheat supplies after exports from the Black Sea region plunged since Russia invaded Ukraine in late February.

India exported a record 7 million tonnes of the grain in fiscal 2021-22. India's exports of the grain have surged since Russia invaded Ukraine in late February.

Also Read: Exclusive | Govt may impose export controls on wheat

The country exported a record 1.4 million tonnes of wheat in April, as buyers scramble for alternatives to Black Sea supplies hit hard by the war in Ukraine.

(With inputs from Agencies)



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first published: May 14, 2022 09:00 am
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