New Delhi: India on Saturday announced curbs on the export of wheat due to sudden spike in the global prices. In an order, the government said the move was made in order to “manage the overall food security of the country and to support the needs of the neighbouring and other vulnerable countries”.
“The government of India is committed to providing for the food security requirements of India, neighbouring and other vulnerable developing countries which are adversely affected by the sudden changes in the global market for wheat and are unable to access adequate wheat supplies,” the government’s order said.
“There is a sudden spike in the global prices of wheat arising out of many factors, as a result of which the food security of India, neighbouring and other vulnerable countries is at risk,” it said.
This comes at a time when the country what procurement is at an eight-year low of approximately 18.5 million tonnes, lowest since the 11.1 mt bought in 2007-08. Moreover, this would be the first time that wheat procured from the new crop (18.5 mt) is less than the public stocks at the start of the marketing season (19 mt).
According to sources, the ban was expected especially after Government officials expressed the fear that wheat production could only be around 95 mt.
More than lower production, concerns were raised over rising wheat prices across the globe. A trade analyst said the Government had probably acted quickly since the US Department of Agriculture had pointed to a 35 mt global shortage of wheat two days ago.
Concerns were further raised after wheat procurement for distribution through the public distribution system by the Food Corporation of India (FCI) dropped alarmingly. As of May 13, the FCI had procured 17.9 mt of wheat, lower by at least 50 per cent compared with the year-ago period.
At least 5 mt of contracts have been signed for exports, while many global trading houses are reported to be holding huge stocks, procured directly from farmers.
Official sources said the Centre might look at providing wheat on a government-to-government basis.
The Government order, curbing wheat exports, also said the move was “to manage the overall food security of the country and to support the needs of neighbouring and vulnerable countries”, the Centre was amending the foreign trade policy making wheat a restricted item for exports from “free”.
Only wheat for which there are proper documents such as Letters of Credit will be allowed if they had been completed before May 13. Also, exports will be allowed with Government permission which implies it could be more of a government-to-government deals, where India could look at helping any country facing food security.