India bans grain exports with immediate effect; next chapter in growing food protectionism

India has immediately blocked grain exports. The measure is necessary to protect the food security of its own population. This has been decided by the Indian Directorate-General for Foreign Trade. However, the international market had expected that Indian grain exports could offset the shortage of global supplies caused by the war in Ukraine.

“Countries that require cereals for food security and submit official supply applications will still be able to count on supplies from Indian supplies,” the Directorate-General notes. “But all other new shipments are prohibited with immediate effect.”

supplies

“The decision to halt grain exports highlights Indian concerns over high inflation, which have fueled a wave of food protectionism since the outbreak of war in Ukraine,” Bloomberg News said.

“Governments around the world are trying to secure local food supplies in an environment of rising agricultural prices. Indonesia has stopped exporting palm oil, while Serbia and Kazakhstan have already introduced quotas on their grain exports.”

“But the curtailment of exports would be a blow to India’s ambition to reap the benefits of the high demand for grain that has emerged since the war in Ukraine, virtually reducing the supply of the Black Sea product. Stall,” notes Bloomberg.

“Customers looked mainly to India to rebuild their stocks. Among others, Egypt and Turkey have recently decided to import their grain from India.”

“With India, another player disappears from global trade,” emphasizes Andrew Whitelaw, grain specialist at consultant Thomas Elder Markets. ‘The world is starting to feel the grain shortage harder and harder. American winter wheat is struggling with inferior quality, while French stocks are also drying up. Exports from Ukraine have become virtually impossible. “

India has been hit by a particularly extreme heat wave. As a result, the grain harvest was adjusted across the country. This had previously prompted the Indian government to consider export restrictions. There are currently still export contracts for 4 million tonnes.

The area around the Black Sea – the planet’s breadbasket – usually represents about a quarter of the global market’s supply. After the outbreak of war in Ukraine, India has tried to fill that void. The Asian country had hoped to be able to export a record amount of 10 million tons of grain.

Targeted initiatives

“In recent weeks, however, problems in the domestic market have come to the fore,” Bloomberg noted. “India experienced the warmest month in March in its history. Hundreds of hectares of cereal crops were damaged as a result. It is estimated that crop yields in some parts of the country have fallen by about 50 percent.”

“This led to great concern. After all, millions of Indians are mainly dependent on agriculture for their livelihoods and food supply. The Indian government also noted that the purchase of wheat for its food aid program will be more than halved.”

The export ban is also likely to affect producers and traders who have stored grain in anticipation of higher prices, according to analysts.

Siraj Chaudhry, CEO of commodity trader National Commodities Management Services, says he understands that the Indian government is taking steps to guarantee its own food supply, but at the same time sees a number of bottlenecks.

“But an approach with targeted measures such as a minimum export price and quantitative restrictions would have provided a better solution,” he stresses. “After all, one suddenly restricts trade and affects the reliability of Indian exporters. In addition, the income model of Indian farmers is also undermined. “

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