India relaxed some restrictions and allowed the export of wheat consignments registered before a wheat export ban was effected. The Indian government had previously declared a ban on wheat exports on 13th May due to shortages in production.
Yesterday the Indian government relaxed its ban on Wheat exports. It now permits export of consignments that were registered or handed over to the customs before 13th May. On the same date, the Directorate General of Foreign Trade issued a notification banning it’s exports due a surge in wheat prices. This could have been due to factors such as the Ukraine war and the heat wave in the country. While the war created shortages of supply, the heat wave impacted wheat producing farmers in North India. As a result, the government predicted a five percent decline in output this year.
In order to ensure that the government has adequate supplies for itself, it effected a ban. According to the Commerce Secretary, B.V.R Subrahmanyam, the prices of wheat had skyrocketed to 20-40 percent in recent weeks. Because of this spike in wheat prices, the government feared that instead of selling their output to it, farmers would sell to traders. This could have impacted the government’s buffer stocks as the pandemic had already depleted it. In case a famine broke out, the government may need to replenish it serve to feed its citizens.
Subrahmanyam also claimed that the government doesn’t want hoarding of wheat. On the contrary, the government wants to it to feed vulnerable nations and people. However, no order is in perpetuity. Once global demand and supply become the same again, and the prices cool off, India may consider supplying the market again.
Reason for Relaxation(Ban on wheat export)
The reason for the relaxation of the government’s wheat export ban partly has to do with a clause in its terms. As per the order issued on May 13, the government may exempt prior commitments made to traders through Letters of Credit. Also the government may export wheat to other countries in case their governments request India to meet their requirements. The commerce ministry claimed that the order was made to ensure India’s food security, check inflation, help other countries facing food deficit and maintain India’s reliability as a supplier
Following the war in Ukraine, the Indian government assured other countries to export them wheat in order to ease supply shortages in the global market. That could have also eased commodity prices. The Government’s ban on wheat exports has caused some concern among G-7 countries. The German Agriculture Minister Cem Ozdemir warned against it. He said if everyone imposes export restrictions, it would worsen the crisis
On the other hand, US ambassador to the UN Linda Thomas Greenfield said India should reconsider its position. According to her, any restrictions on exports would exacerbate food shortages.China, on the other hand, seemed to support India. A Chinese state outlet opined that “blaming India won’t solve the food problem.
Following this, the government approved a consignment of wheat to Egypt from Kandla on prior request by the Egyptian government. The ban had also left thousand trucks waiting in queue outside the ports to deliver their holds. In a way a combination of these factors serve reasons why the government had to reconsider its outright ban on it’s exports.
In Kandla, M/S. Mera International Pvt ltd, posesses representation for loading 61,500 MT of wheat and exporting it to Egypt. Till yesterday, the company has loaded 44,340 MT of wheat. Even then, the very sudden nature of the ban has skyrocketed it’s prices in the global market. (Inputs from the Times of India,NDTV, the Hindu, ANI)
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