India Bans Wheat Exports Reacting to Heat Wave and Domestic Food Price Surge

Arjun Pandit
14 May, 2022
New York City

Late Friday evening the government banned the export of wheat citing falling inventories and production and rising domestic prices. 

Food Secretary Sudhanshu Pandey and Commerce Secretary B V R Subrahmanyam jointly addressed a press conference and said that the unregulated export often leads to hoarding. 

The minsters were quick to add that no ban is "in perpetuity" and the government will review the ban if domestic conditions improve. 

India exported about 1.4 million tons of wheat in April but the rising food prices and falling crop production changed the government's mind this week. 

Wheat production is likely to fall at least 5% below the 111 million tons target level and spot prices have surged as much as 20% above the 20,150 rupees or $270 a ton fixed-price set by the government.

"Wheat production is expected to decline in the current year to 105 million tons but there is no dramatic fall in production," Food Secretary Pandey noted.    

The Indian government had set the wheat export target of 10 million tons this year after exporting 7.5 million tons in the financial year ending in March 2022. 

About half of India's exports were sent to the neighboring-country Bangladesh. 

The recent heat wave across the nation has dramatically changed agriculture conditions in the Northern region where most of the wheat is produced. 

Temperatures have reached above 45 degrees centigrade, 5 degrees above the normal in the last five weeks. 

International wheat price has surged to $480 a ton, significantly higher than the domestic price below $300 a ton set by the government. 

India is the second largest wheat producer in the world with a production of 110 million ton. 

China, the largest wheat producer, exported about 10 million tons of wheat of the 134 million tons of production in 2021. 

Russia, the third largest wheat producer, exported about 37 million tons of the 85 million tons according to the data available from the World Trade Organization.   

Ukraine exported 20 million tons of the 25 million tons of wheat production in 2021, according to the government statistics.  

Australia and the United States each exports about 2.7 million tons of wheat. 

Russia's invasion of Ukraine and the Western nations' sanctions on Russia removed a significant amount wheat available for importers. 

At least six nations have put restrictions or ban on wheat exports including Philippines, Argentina, Kazakhstan, Turkey, Bulgaria, and Hungary.