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Sunday, 15 May 2022

India bans wheat exports to all except “vulnerable countries”

India has joined the growing wave of food protectionism and banned wheat exports amid surging local prices and a severe heatwave that is threatening to hit production. The government announced (pdf) on Friday that it is prohibiting the export of wheat to “manage the overall food security of the country” though will still permit shipments under existing letters of credit and allow countries who need wheat “to meet their food security needs” to apply to the government for an exemption.

That sounds a lot like us: As the world’s largest importer of wheat, Egypt has been hit hard by the grain shortage triggered by the Russia-Ukraine war. We usually source north of 80% of our wheat imports from the two countries, and are facing at least an additional EGP 15 bn burden on this year’s fiscal budget as a result of spiraling grain prices. Since the war broke out, the government has been in talks with a number of other wheat producers including India, which was added to the official suppliers list last month.

Sure enough, we’re trying to get our name on that exemption list: “There are talks between India and Egypt on the highest levels to be part of the exemptions of this decision,” head of the Agriculture Ministry’s Quarantine Authority Ahmed El Attar told Reuters. “There’s constant communication with our ambassador in New Delhi.”

New Delhi says it will help those who need it most: As the world’s second-largest wheat producer, India is “committed to providing for the food security requirements of India, neighboring 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 said.

Our first cargo of Indian wheat could soon be on its way to Egypt, according to the Agriculture Ministry, which said yesterday that the 55k-ton shipment had passed inspection by ministry officials sent out to India.

We’re still trying to find new suppliers: The government has held talks with the US, Argentina and France, and is also considering purchasing supplies from Mexico and Pakistan.

Regardless of whether Egypt is allowed to continue purchasing wheat, India’s ban will heap further pressure on the world’s food supply, which is already under stress due to the conflict in Ukraine and severe weather in key producing countries.

Making matters worse: Global wheat production is likely to fall for the first time in four years during the current marketing year, according to the US Department of Agriculture’s platest forecast (pdf) published. Production is expected to fall by 4.5 mn tons this year to 774.8 mn tons due to weaker harvests in Ukraine, Australia and Morocco, it said. Ukraine’s wheat production could fall by 35% to 21.5 mn tonnes from the year before.

The G7 is looking for ways to get Ukrainian wheat out of the country and ease the escalating global food crisis, German foreign minister Annalena Baerbock said yesterday, according to the Financial Times. Speaking following a three-day meeting of G7 foreign ministers in Germany, Baerbock said that Russia’s blockade of Ukrainian ports is preventing the export of some 25 mn tons of wheat. In its final communique (pdf), the group said it would “address the causes and the consequences” of the global food crisis at the meeting of G7 development ministers, which is taking place on 18-19 May.

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