Who is responsible for the global wheat crisis?

NEW DELHI: India — the world's second-largest grower of wheat — last week ordered a ban on the commodity’s new export deals, drawing criticism from the Group of Seven (G7) industrialised nations as inflation soared in the wake of the

Ukraine

war. It called on India to assume its responsibility as a G20 member.

Wheat prices surged to a new record high in European trading to 438.25 euros ($456.68) per tonne as the market closed on Monday after India decided to ban the exports, even as thousands of trucks were stuck in queues outside Indian ports on Tuesday.

However, on the day, India said it will allow overseas wheat shipments awaiting customs clearance, introducing some relaxation in exports, including to Egypt. It's been decided that wherever wheat consignments have been handed over to Customs for examination and registered into their systems on or prior to May 13, they would be allowed for export, said the government of India

Is only India responsible for the price rise?
India previously had said it was ready to help fill some of the supply shortages caused by the February invasion of Ukraine, which had accounted for 12 percent of global exports.

It planned to increase exports this financial year to 10 million tonnes from seven million tonnes.

But on May 13, India put a ban on exports, only permitting requests approved by New Delhi from other governments, before giving some relaxations on Tuesday.

This came in sharp contrast to India's stand in April during Prime Minister Narendra Modi’s meeting with US President Joe Biden and at the United Nations, wherein the country wanted the World Trade Organization (WTO) to allow wheat export.

But anyhow India went with the ban, citing runaway inflation and food security as the reasons. India’s retail inflation hit an eight-year high of 7.79 per cent in April, driven by rising food and fuel prices.

Some parts of India, commerce secretary BVR Subrahmanyam had said on Sunday, have seen prices in wheat and flour jump 20 to 40 per cent in recent weeks.

Because of the sharp rise in global prices, some farmers were selling to traders and not to the government.

This got the government worried about its buffer stock of almost 20 million tonnes — depleted by the pandemic — needed for handouts to millions of poor families.

"We don't want wheat to go in an unregulated manner where (wheat) may either get hoarded and is not used for the purpose, which we are hoping it will be used for — which is serving the food requirements of vulnerable nations and vulnerable people," Subrahmanyam had said.

Also India recorded its warmest March on record — blamed on climate change — and in recent weeks has seen a scorching heatwave with temperatures upwards of 45 degrees Celsius (113 Fahrenheit).

This hit farmers in wheat-producing northern India, prompting the government to predict output would fall at least five per cent this year from 109 million tonnes in 2021.

Cause of shortage

But the supply shortages have been caused by Russia's February invasion of Ukraine — both bread baskets of Europe — which had accounted for 12 per cent of global exports.

Before Russia invaded Ukraine nearly three months ago, the two countries supplied about one-third of the global annual wheat sale. They also supplied 55% of sunflower oil and over 15% of maize and barley. The war has badly disrupted the supply chain. Prices have been soaring ever since the Ukraine war began.

While India is a small exporter, its assurances of supplies from its large buffer stocks had provided some support to global prices and soothed fears of major shortages, but the announcement marked a policy U-turn by the government.

China backs India

China, however, on Sunday put the blame back on the developed world for the wheat crisis. "Blaming India won't solve the food problem," wrote Chinese government's mouthpiece Global Times, "the agriculture ministers from G7 urge India not to ban wheat exports, then why won't G7 nations themselves move to stabilise food market supply by hiking their exports?"