Second Largest Producer BANS Wheat Exports – Hungry Times Ahead?
(ConservativeHub.com) – Food supply issues are hitting countries around the world hard. It isn’t just in the US where some foods have disappeared from shelves. Concerns about potential shortages caused India’s government to announce a ban on most wheat exports on May 14. While the nation is the second-largest wheat producer globally, it isn’t a top exporter. Yet, the country had expected to increase its exports this year. On the heels of export bans instituted by other nations, India’s government wanted to preclude any food shortages at home. Following the onset of this new ban, wheat prices soared.
The Fragile World Market
India decided to stop exports due to a concern over food security. The nation’s leaders felt they had to immediately cut off shipments out of the country to prevent potential supply issues related to the weather. Following the announcement, the Financial Times reported wheat prices soared by the maximum allowed on May 16.
The publication explained that wheat prices are at a high, up over 60% so far in 2022. The most significant causal factor has not been this decision by India but the conflict between Russia and Ukraine. Those countries are among the top wheat exporters in the world. Because of this, the market was looking to India to fill in for the lack of wheat coming from Europe. The country did that last year when bad weather reduced the number of crops coming from Ukraine.
Looking to the Future
Reuters reported the ban coming from India would strain the market. Because it went into place right away, traders expecting to move 1.8 million tonnes of wheat experienced huge losses. They must now sell domestically, which will bring in much less profit. The only relief was for those who already had guarantees or letters of credit prior to May 13, but those sales only make up a small portion of the total crop.
Adding to the overall concern, the US Department of Agriculture reported on May 12 that the outlook for the 2022/23 wheat supplies was down 3%. There is a growing worry over global food security.
The New York Times reported that the ban from India could have dire consequences for organizations trying to fight hunger. The World Food Program has already begged countries not to institute bans. The publication also reported that India’s leaders had said the country was willing to step in and fill gaps in supplies left by Russia and Ukraine. The drastic turnabout on this matter could strain India’s international relations in some cases.
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