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Wheat Crisis: Wheat prices increased in international market

After India's ban on the export of wheat, its prices have increased in the international market. The price of wheat sold

By Ground report
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Top wheat producer states of India in 2022

After India's ban on the export of wheat, its prices have increased in the international market. The price of wheat sold in the international market has increased by 5.9% in Chicago. 

Due to the heatwave in India, the wheat crop was affected and prices increased, after which its export has been banned.

This year, the price of wheat in the global market has increased by almost 60 per cent, due to which the prices of bread and noodles have increased.

The Government of India has said that the export of wheat will continue to the countries with which agreements have already been signed and countries which will demand supplies for food security. Government officials have also said that this ban is not permanent and can be lifted once the situation returns to normal.

However, this decision of India has been criticized by the Agriculture Ministers of the Group of Seven ie G-7. This group includes countries such as Canada, France, Germany, Italy, Japan, the UK and the US.

India is the second-largest producer of wheat in the world. However, before this, most of the crops in India were sold in the domestic market only.

But Ukraine's wheat exports have plummeted after Russia's attack, and given the threat of drought and floods in several major producing countries, traders were hoping for supplies from India to make up for the shortfall. Before the ban, India had set a target of exporting 10 million tonnes of wheat this year.

Second wheat producer in the world, India has decided to ban exports of this commodity, except with special authorization from the government, in order to ensure the "food security" of its 1.4 billion inhabitants.

Export contracts concluded before the decree may be honoured, the measure only concerns future exports. For the latter, India will approve requests from other countries on a case-by-case basis "to meet their needs".

Gathered in Stuttgart, Germany, the G7 Agriculture Ministers immediately criticized this decision, which comes as the world wheat market is already under great tension due to the Ukrainian conflict.

"If everyone starts imposing such export restrictions or even closing markets, it will only worsen the crisis and it will also harm India and its farmers," said the German Minister of Agriculture. Agriculture, Cem Özdemir, following a meeting with his counterparts.

"We have come out against export restrictions and call for keeping markets open... We call on India to take responsibility as a member of the G20," he added.

Launched on February 24, the Russian military offensive in Ukraine is seriously disrupting agricultural activity in the countryside of this country, which until then was the world's fourth-largest corn exporter and is on the way to becoming the third wheat exporter.

Due to the blockade imposed on Ukrainian ports, around 20 tonnes of grain are waiting in silos to be exported and this year's harvest is threatened.

Rising prices and shortages thus pose a risk of famine and social unrest, particularly in the poorest countries which massively import their grain needs.

The context also raises fears of protectionist measures on the part of exporting countries: at the end of April, Indonesia, the world's largest producer of palm oil, banned palm oil exports in order to contain the surge in prices on the domestic market and shortages.

Until Saturday, India had for its part expressed its readiness to come to the aid of world markets in the event of supply problems. "Our farmers have made sure to take care of not only India but the whole world," Trade and Industry Minister Piyush Goyal said last month.

The country had indicated that it wanted to increase its annual wheat exports, from April 1, from 7 to 10 million tonnes, bringing some air to the sector.

On Thursday, New Delhi had also announced that delegations were going to several North African countries, Turkey, Vietnam, Thailand and Lebanon to "study ways to strengthen wheat exports from India". 

The announcement from New Delhi comes as India has been facing extreme heatwaves for two months: the country experienced the hottest March in its history, and the heatwave has continued in recent weeks with temperatures sometimes above 45 degrees.

In the last fiscal year 2021-2022, India broke its record for wheat exports, reaching 7 million tons of this cereal, worth more than 2,000 million dollars, according to the General Directorate of Foreign Trade.

The ban on wheat exports contradicts claims made last April by Prime Minister Narendra Modi when he said India could feed the rest of the world if the World Trade Organization gave it permission to do so.

India is the second-largest producer of wheat in the world. Annually collects around 107 million tons, which account for 13.5 per cent of world production, according to data from the Ministry of Commerce. However, most of that harvest is destined for domestic consumption.

The price of wheat has skyrocketed since the beginning of the conflict between Russia and Ukraine since both countries represent around 30 per cent of global exports of this cereal. The rise in the cost of wheat, added to that of other foods and oil, has pushed inflation in India to 7.79 per cent in April 2022, its highest level since May 2014.

In addition, India has been affected in recent weeks by several severe heat waves, reaching up to 47 degrees Celsius in some parts of the country. High temperatures have devastated their wheat fields and reduced crop yields. 

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