India bans wheat exports. The global food supply will be in a difficult position.

Welcome to WordPress. This is your first poWhen Russia, the world’s largest wheat exporter, invaded Ukraine earlier this year, India, as the world’s fifth largest wheat exporter, had a backup plan for the global food supply chain. That plan just Edit or delete it, then start writing!

Over the past weekend, India, the world’s second largest wheat producer after China, announced it would ban wheat exports. There are already fears of growing famine around the world. Even higher food prices are now expected.

Separate wheat from the inflation chart

When exports from the Black Sea region plummeted following Russia’s invasion of Ukraine in February, the Indian government helped calm markets by promising to supply a record 10 million tonnes of wheat this year.

Moreover, according to the US Department of Agriculture, India has 10% of the world’s grain stocks and this surplus has been assessed as crucial to offset the global supply shortfall.

Yet since mid-March, a severe heatwave has destroyed much of this year’s harvest and threatened India’s ability to produce the 111 million tonnes of wheat the government forecasts for 2022.

Cooling local prices in India

India subsidises farmers by setting minimum prices for selected crops. With wheat prices at record highs of up to Rs 25 000 or $323 per metric tonne, farmers can hardly settle for a price floor of Rs 20 150. By banning exports, the government is thus trying to cool local prices.

This could put pressure on already high food costs in some countries. Wheat prices will rise to a record $450 a metric tonne in 2022, up 42% from last year, according to World Bank estimates last month, which still do not take into account India’s export ban.

India said its decision was based on rising international prices that threatened its own food supply. In fact, food inflation in India rose by 8.3% in April.

The world, panic and famine?

“Given climate fluctuations and concerns about food self-sufficiency, we should maintain a surplus,” Devinder Sharma, an agricultural policy expert, told the Washington Post. “We have a large population to take care of.”

Trade protectionism was already driving up food prices. Last month, Indonesia banned exports of palm oil, the world’s most traded vegetable oil. Along with Russian and Ukrainian sunflower oil, this means that more than 40% of the world’s vegetable oil market is starting to feel the pinch.

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