Ban on wheat export

The Centre’s ban on export of wheat with immediate effect is a surprise change in policy, prompted by the need to watch out for domestic requirements and interests despite the strong demand for the crop from India. The move to stock up and ensure the availability of ample supplies within the country comes on the back of procurement by government agencies plunging to a 15-year low, the scorching heatwave curtailing output and the worrying inflation numbers, as retail and food prices touch unbearable highs. Exports would still be allowed for letters of credit already issued and at the request of countries trying ‘to meet their food security needs’.

Advertisement

The government notification attributes the ban to the sudden spike in global prices of wheat, though a month back, the sentiment in New Delhi was that Indian farmers ‘have ensured our granaries overflow and we are ready to serve the world’. Last week, a record export target was also outlined, with an announcement of sending trade delegations to explore ways to boost shipments. Food security is now helming the swift shift. The ban is likely to drive up global prices, since several countries were banking on India to fill the gap after exports from the Black Sea region plunged following Russia’s invasion of Ukraine.

A bonus over the minimum support price (MSP) of Rs 2,015 per quintal at the start of the season itself, it is being contended, could have been a better approach than the ban, which has drawn criticism of being a knee-jerk reaction that could deprive farmers of higher prices. For the government, the about-turn is intended to salvage the falling inventories and cool down the market price of wheat, bringing it closer to the MSP. It could force traders and hoarders sitting on stockpiles in anticipation of a price rise, along with the farmers holding back their crop, to sell at the MSP.