The only thing India can possibly do during this year’s global food crisis is to not make it any worse for its own poor. As the cost of basic nutrition balloons everywhere, the second-most-populous nation’s best bet is to fall back on its extensive system of State procurement and public distribution to soften the blow.
But, around mid-April, Prime Minister Narendra Modi promised US President Joe Biden that India could feed the world. If the World Trade Organization allowed it, “India is ready to supply food stocks to the world from tomorrow,” Modi said, recalling the conversation.
Modi’s ministers and advisers ought to have known better. Just as the Indian leader was talking to Biden, the north Indian wheat crop was being scorched by a deadly heat wave. The Ukraine war and the resulting grain shortage may have presented India with an opportunity to script a role for itself in international trade, but Climate Change and a brewing chapati crisis should have been reasons to curb the enthusiasm.
Eventually it had to do just that: In mid-May, India imposed a hasty ban on wheat exports to ensure its own food security. It was a repeat of the COVID-19 fiasco when Modi bragged about how India, the world’s pharmacy, will save humanity. But a vicious outbreak of the delta variant forced it to backtrack. By March 31, India’s share of the global vaccine trade was just 2.3 percent. Just as with the pandemic, the ripples of New Delhi’s wheat flip-flop are being felt internationally. The Group of Seven nations criticised the embargo. "If everyone starts to impose export restrictions or to close markets, that would worsen the crisis," German agriculture minister Cem Ozdemir said.
Actually, the opposite might be true. From Indonesia’s restrictions on palm-oil shipments to Malaysia’s ban on chicken exports, some 30 countries have resorted to such measures. Had India not closed its markets, the country might have faced a shortage of chapatis — India’s ubiquitous, unleavened daily bread. People, rich or poor, don’t consume wheat; they buy flour to make chapatis. This year, there may be 6.5 percent fewer chapatis for the same crop as previous harvests, while wheat output itself will likely see its first dip in seven years.
In a nutshell, the problem is this: Last year, one kilogram of Indian wheat resulted in about 770 grams of flour. This year, that might go down to 720 grams. The hottest March in 122 years has stunted grain formation. In fact, traders are buying wheat that is below their normal flour-yield cut-off level — that would be a score below 76 on a hectoliter test. Now, inferior readings of 72 are acceptable because of the scarcity of good wheat, according to industry sources.
Blame can be laid to the unusually early heat wave that engulfed India and Pakistan, weather that was made at least 30 times more likely by human-caused Climate Change, according to scientists at the World Weather Attribution initiative. India’s crop will be lucky to exceed 100 million tons this year, a steep decline from the initial government estimate of a record 111 million-ton harvest.
Taking 15 million metric tons from this total to export to the world — as the government boasted — was more than a little short-sighted. For one, the Food Corporation of India, the State-buying agency, has neglected to fill out its granaries. Last year, it bought 43 million metric tons for its stockpiles. This year’s target has been slashed to less than half of that. Those 19.5 million tons of purchases, plus the 30 million tons currently in FCI storage will mostly go into public distribution if the Modi administration extends the free grain programme it started during the pandemic. There will be little left in the State’s wheat pool to tamp down any speculative fervour in the domestic open market.
The government isn’t without tools. If prices skyrocket, New Delhi can impose stock limits to force traders to release their hoards. The FCI could also offload more rice than wheat into the subsidised public distribution system. Most Indian diets nowadays can accommodate both. This could free up about 10 million tons of wheat to accommodate government-to-government supply deals such as with Egypt.
Still, these are stopgap solutions. The premise of Modi’s failed farm-reform legislation was to give more freedom to farmers to discover free-market prices for their produce. The about-face over wheat shows that when it comes to India’s agriculture, primacy of markets remains a pipe dream. A limit on sugar exports has also come up. Unlike wheat, where India is a bit player in global trade, the country is number two in sugar shipments after Brazil. That’s a perfidy in itself because the sweetener guzzles water — and by selling it overseas, India exports its precious rain.
Maybe the current wheat shortage will ease if, as Lithuania has proposed, a protective corridor for grain shipments from Ukraine ends up breaking a Russian blockade of the Black Sea. With that, the pressure to feed India’s 1.4 billion people may also lift. But the long-term threat of Climate Change won’t go away. As global temperatures rise two degrees Celsius or more above pre-industrial levels, the country’s chapati challenge is only going to become more urgent.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Views are personal, and do not represent the stand of this publication.
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