In April, Modi had publicly said that the world’s most populous democracy was willing to fill some of the gap left by Ukraine’s world grain markets by increasing its wheat exports after five consecutive record crops. India traditionally exports only a modest amount of wheat and retains most of its crop for domestic consumption.
On May 12, India’s Ministry of Trade and Industry said it was preparing to send delegations to nine countries to export a record 10 million tonnes of wheat this fiscal year – a sharp increase from the previous season.
But a barrage of alarming data changed all that.
First, the Indian wheat crop was revised down in early May when a sudden heat wave affected the crops. Then data from May 12 showed that inflation in the country of 1.4 billion was high for almost eight years due to higher food and fuel prices, which were pushed up by the war in Ukraine.
Terrified of rising inflation, which had helped overthrow the former Congress party government in 2014, Modi’s office told the Commerce Department on May 13 to immediately put the “brake” on wheat exports, according to an official. , who asked not to be identified due to the sensitivity of the case.
“This (inflation data) prompted the government to issue a midnight order,” which banned wheat exports, another source said.
News of the ban from India, which is the only major wheat exporter at that time of year, drove wheat futures in Chicago 6% higher after markets reopened on Monday.
Neither Modi’s office nor the Ministry of Commerce responded to a request for comment.
India is one of at least 19 countries that have imposed restrictions on food exports since the war in Ukraine pushed up prices, hampered international trade flows for several agricultural commodities and sparked violent protests in some developing countries.
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From Delhi to Kuala Lumpur and from Buenos Aires to Belgrade, governments have imposed restrictions at a time when the economic damage from the COVID-19 pandemic, combined with factors such as extreme weather events and supply chain bottlenecks, is already causing hunger around the world had reached unprecedented heights.
The United Nations World Food Program (WFP) said in April that the number of people living with acute food insecurity – when their inability to eat enough food puts their lives or livelihoods at stake – had more than doubled since 2019 to 276 million in the 81 countries where it works before the conflict in Ukraine started.
The war – which disrupted exports from Russia and Ukraine, two agricultural powers – would increase that number by at least 33 million, especially in sub-Saharan Africa, it predicted.
Under World Trade Organization rules, members may impose export bans or restrictions on food or other products if they are temporary and necessary to correct “critical deficiencies”.
India’s trade minister, Piyush Goyal, told Reuters last month that he had been in contact with the WTO and the International Monetary Fund (IMF) to explain that India should prioritize its own food security, stabilize domestic prices and need to protect itself. even against hoarding.
But export restrictions threaten to exacerbate the rise in world food prices: creating a contagious effect as a deeper crisis causes other countries to take similar steps, said Michele Ruta, chief economist at the World Bank’s macroeconomics, trade and investment global practice.
Many economists say the global food crisis is already more severe than the last one, which peaked in 2008, driven by factors such as drought, global population growth, higher meat consumption in major developing economies and increased use of crops for food production. biofuels.
Lack at the time has sparked protests around the world, especially in Africa, where food makes up a relatively large part of the household budget.
Simon Evenett, Professor of International Trade and Economic Development at the University of St. Gallen, said that in 2008 the assurances from international organizations to national governments that there was enough food worldwide took some of the wind out of the sails of those who pushed for export restrictions …
“This time it is harder to do because we are dealing with a supply shortage in both Ukraine and Russia,” Evenett said, adding that the size of the summer harvest at major food producers will help determine how the situation develops. i will develop in the second half of 2022.
Ukraine and Russia together accounted for 28% of world wheat exports, 15% of maize exports and 75% of sunflower oil exports in the 2020/21 season, according to data from the US Department of Agriculture.
World food prices have stabilized at high levels over the last two months as harvest approaches. However, there are already some worrying signs: the drought in the US will reduce the size of the winter wheat crop, while the wheat crop in France this month has been hit by hail, strong winds and heavy rain.
Dry weather in Argentina – the world’s sixth largest wheat exporter – has halted planting and pushed production expectations for the 2022/23 season.
In addition, the mood in international fora, such as the G20, is now less cooperative after years of populism and rising tensions between key geopolitical actors, Evenett said.
“The current situation is in many ways much more worrying than in 2008, and look at the risks to political stability that arose at the time,” he said. “We want a very tense six to nine months ahead of us.”
Some countries had already imposed export restrictions last year due to the tight global food supply. But dominoes began to decline in earnest after the Russian invasion of Ukraine on February 24, when world prices of both cereals and vegetable oils skyrocketed.
In March, Argentina raised taxes on exports of soybean oil and flour and introduced a lower ceiling on exports of new wheat than last year.
India’s ban on wheat exports came after Indonesia, the world’s largest palm oil producer, had already restricted exports of palm oil – an essential ingredient in cooking and baking – from April 28, citing the need for “abundant and affordable supplies”.
India is the world’s largest importer of palm oil and Indonesia is one of the main suppliers. Indonesia lifted its ban on 20 May.
Malaysia banned chicken exports from the beginning of this month on May 23 after a global feed shortage, exacerbated by the conflict in Ukraine, disrupted poultry production and led to a sharp rise in the prices of one of the country’s cheapest protein sources.
The wave of export restrictions already hits nearly one-fifth of the calories traded globally – that’s almost double the impact of the last global food crisis in 2008, according to the International Food Policy Research Institute (IFPRI), a Washington-based think tank , which aims to reduce poverty, to reduce in developing countries.
“This kind of action tends to provoke panic behavior or hoarding among buyers … accelerating price increases,” said IFPRI researcher David Laborde Debucquet.
The European Union – which includes several of the world’s largest food importers in terms of value – urges its trading partners not to adopt protectionist policies.
“The European Union is keeping its food exports going, and so should everyone,” EU Commission President Ursula von der Leyen said in a speech this month.
INSURANCE OF DOMESTIC SUPPLY
Even before the war in Ukraine, the Argentine government, which is struggling with domestic inflation now exceeding 60%, had taken measures late last year to halt the rise in local food prices. It introduced ceilings on maize and wheat exports in addition to a previous ban on shipments of beef.
After the invasion of Russia, it took further measures and increased taxes on exports of processed soybean oil and flour.
Argentina is the world’s largest exporter of soybean oil and flour, the second largest supplier of maize and a major exporter of wheat.
A source in Argentina’s Ministry of Agriculture, who refused to be identified because he was not allowed to speak to the media, said the government’s priority was to ensure the food needed for domestic consumption.
The export restrictions imposed in late 2021 have helped protect domestic millers and consumers from the sharp rise in international prices following the conflict in Ukraine, the source said.
But Gustavo Idigoras, head of Argentina’s Chamber of Grain Processers and Exporters CIARA-CEC, said the government, despite export restrictions and additional taxes, struggled to cope with entrenched food price inflation in Argentina, which was already high before the conflict. Ukraine, to put an end to it.
In the Buenos Aires district, the cost of bread has risen by 69% in one year, meat by 64% and vegetables by 66%, forcing people to change their eating habits and look for cheaper deals.
Edith Elizabeth Plou, 39, a store owner in Buenos Aires, had traveled miles from her home to get to the Argentine capital’s large Central Market to get cheaper prices on her groceries, which have risen sharply over the past year.
“I work eight hours, and the truth is, I often think about applying for another job to cover my expenses,” Plou said.