Problems and prospects of wheat export
Last month, the Bank of England issued a grim warning that there may be an “apocalyptic” increase in global food prices. Reports of adverse weather hitting crops around the world, including India, are pouring in, and some analysts estimate that the world has alarmingly low stocks of wheat.
In this context, India’s decision to restrict and regulate sugar and wheat exports are laudable moves which correctly give top priority to food security and affordability for our own 130 crore people. Duty cuts on crude soybean and crude sunflower oils, tax cuts on fuel, and export duty on steel are steps in the same direction -- protecting the interests of Indians just as the developed world looks after the welfare of its own citizens first.
In 2021-22 India produced about 105 million tonnes of wheat and exported 7 MT. This year, the initial estimate of wheat production was 111.32 MT when our PM offered to export more wheat to feed the world, but the unusually high temperature in recent months cut the estimate to 105 MT.
After export restrictions since May 13 prices stopped shooting up, and have fallen in recent days. Similar, restriction of sugar will ensure the country has adequate stocks and prices do not shoot up when demand surges in the festive season.
It is amusing that developed countries have singled out India and criticised our decision on wheat exports as if we have conventionally been major suppliers for the world and the planet’s food security hinges on policy signals from New Delhi. The International Monetary Fund has decided to “beg” India to reconsider the restriction on wheat exports.
The truth is that among wheat exporting countries, India ranked 19th in 2020, 35th in 2019, 36th in 2018, 36th in 2017, and 37th in 2016. India’s share has been less than 1 per cent in the global wheat trade.
G-7 group of countries that have criticised India need to look inwards. They must be told to use data to apportion who should be blamed for scarcity.
USA and Canada had a share of 13% each in the global wheat trade in 2020, while France and Ukraine were at 10% each. Australia and Argentina provided another 5% each. India’s exports rose in the last fiscal year, but they were tiny compared to shipments from these countries.
Russia has a share of 19%. Add to it Ukraine’s wheat and we are talking about more than a quarter of global supply, which would not have been disrupted if the self-declared champions of global food security had adopted a negotiated approach instead of head-on conflict with Vladimir Putin.
Today Russia is unable to export wheat because of trade embargoes. Cruelly, these don’t apply to massive energy imports by Europe. Having obstructed a major source of supply, it is foolhardy to pounce on India.
Egypt, Turkey, Kazakhstan, Kyrgyzstan, Kuwait, Kosovo, Belarus have restricted wheat exports. Egypt and Turkey have also been importing significant quantity of wheat from India and have no locus standi for demanding open exports after having restricted them.
Countries around the globe are guarding their food security with export controls on cooking oil, oilseeds, cattle, oats, potatoes, sugar, cereals, meat, flour, poultry, eggs, pasta, processed food, chicken meat, rice, corn and soybean.
Many countries such as Indonesia, Argentina, Kazakhstan, Cameroon, Kuwait, Hungary, Ghana, Algeria and Morocco have blocked food exports.
Indonesia’s ban on palm oil exports shook up the market as the country accounts for about a third of all vegetable oil exports. The restriction had a major impact on developing countries such as India and Bangladesh which depend heavily on Indonesia for cooking oil. Not something the developed world or the IMF cares about.
The sanctimonious (अधिकश्रेष्ठएवंनैतिकहोनेकादिखावाकरनेवाला; दिखावटीतौरपरनैतिक; पाखंडी; ढोंगी) also need to learn to stop wasting food. As per UNEF food index 2021 on household food wastage, India is among the best performers. Our wastage is estimated at 50 kg per capita per year. In many countries the number is higher than 70 kg, say, Korea, Argentina, Germany, Indonesia, UK and France. France has a score of 85. Australia and Saudi Arabia exceed 100.
All said, India has acted responsibly and promised to supply wheat to neighbouring and vulnerable countries and will honour contracts already signed. It will also ensure that wheat reaches the needy countries instead of being cornered or hoarded by market manipulators.
Critics have also raised the issue of better prices for farmers.
The fact is that every year, almost the entire procurement is completed by the middle of May. This year, farmers have enjoyed a higher price for almost their entire output. The government still advised states to keep buying wheat until the end of May.
The wheat trade has hit an air pocket, which may lead to an emergency. In dealing with this, the advice for passengers in an aircraft is relevant: “In case of an emergency, wear your own oxygen mask first, before helping others.” For a smooth landing, G-7 and IMF should shed their hypocrisy and pitch for “free passage” of Russian and Ukrainian wheat or urge WTO to let India export wheat from government stocks.
(The columnist is a Vedic scholar, former ambassador to Finland; and President of the Samarasata Foundation)
June 02 2022