Indian Govt Bans Wheat Export With 'Immediate Effect' as Production Falls

The Indian government generally buys wheat from Indian farmers from April to mid-May. Media reports suggest that this year so far, the government is expected to procure only 18.5 million tonnes of wheat from Indian farmers, the lowest amount in 15 years.

The Indian government has banned wheat exports with immediate effect, according to an official notification issued by the Directorate General of Foreign Trade (DGFT) late Friday night.

"Export of all wheat, including high-protein durum and normal soft bread varieties, have been moved from free to the prohibited category with effect from 13 May (Friday)," the notification reads, citing "a sudden spike in the global prices of wheat arising out of many factors" as the primary reason for the restriction.

However, two kinds of exports will still be allowed.

First, the federal government has said that exports will be permitted to the "neighbouring and other vulnerable developing countries which are adversely affected by the sudden changes in the global market" on the basis of permission granted by the Central Government "to meet their food security needs".

The second is export under transitional arrangements, "where an irrevocable letter of credit has been issued on or before the date of this notification, subject to submission of documentary evidence as prescribed," it further added.

Why is India's Stock Running Out?

The demand for wheat or wheat-based products from India has increased since the beginning of Russia's special military operation in Ukraine. Russia and Ukraine account for over 28 percent of global wheat exports.

Against the backdrop of the Moscow's special operation to "demilitarise and de-Nazify Ukraine", wheat supplies in nearly 55 nations have reportedly been been hit, due to high wheat prices and a shortage of supplies in particular, leading governments to look for alternative exporters.

The projected combined global shortfall in wheat supply due to the Ukraine crisis is reportedly around 60 million tonnes.

Apart from that, in India, wheat production was adversely affected due to a sudden spike in temperatures in the second half of March in the country. Due to this, farmers have reported a 15-20 percent decline in their production yield.

In 2021-22, the country's opening stocks were 27.3 million tonnes (mt), with the government having procured 43.3 mt from farmers.

This year, the opening stocks were 19 mt, and so far, the government has procured 18.5 mt of wheat, the lowest amount since 2007-08, when 11.1 mt were bought. The government has extended the procurement deadline till June.

Earlier in May, India’s Department of Food and Public Distribution (DFPD), said that the government had been able to procure 16 million tonnes of wheat by 2 May, nearly 30 percent less than what it had been able to buy from farmers during the same period last year.