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Navtej Singh hoarded half of his wheat, hoping to sell it at a high price when there was a shortage, but the export ban prevented him from doing so.
India is the world’s second-largest wheat producer, but New Delhi imposed an export ban on the project on May 14 to protect the country’s food security, despite fears that the move could lead to severe global food shortages.
India’s decision, combined with supply shortages in Russia and Ukraine, two of the world’s top five wheat exporters, pushed wheat prices to record highs in Chicago and on the European Mercantile Exchange.
Indian farmers harvest wheat in a field on the outskirts of Amritsar, Punjab state, India, on April 12. picture: AFP
But in Asia’s largest grain market in Khanna, Punjab state, considered India’s “granary”, wheat prices are heading in the other direction.
Thousands of farmers from wheat growing areas come here every year to sell. The market has dozens of huge warehouses, each the size of a football field.
Wheat used to sell for 2,300 rupees ($30) a tonne, but after the export ban, the price fell to 2,015 rupees, the government’s floor price for grain purchases.
The situation has left India’s hundreds of millions of wheat farmers struggling even more after being directly affected by the unusually hot weather.
This year, Navtej Singh has harvested 60 tonnes of wheat. He hoarded half of it, hoping to sell at a low price when the market was in short supply, but the export ban prevented him from reacting and hurriedly dumped the stock.
“This ban is appalling,” Singh said. “The price is so low that it can’t even cover the initial cost. I can’t wait. I have to sell it right away.”
He said authorities made “selfish” decisions without consulting farmers. “This year’s harvest has been lost because of the reduced production. The ban has made our lives even more difficult,” he said.
India produced 109 million tonnes of wheat in 2021 and exported 7 million tonnes before the heat hit India and Russia launched military operations in Ukraine. India is expected to increase mfy rice harvests and exports this year.
Prime Minister Narendra Modi even wanted to “provide wheat to the world” last month when the conflict in Ukraine caused food shortages. But extreme weather caused by climate change is affecting Indian crops more and more frequently. India’s wheat output was 4 million tonnes lower than expected as heat hit Punjab.
In a food security plan during the pandemic, governments at all levels in India are reducing wheat purchases from the national distribution system, which provides free or subsidized food to nearly 800 million people.
However, the retail price of flour remains at a 12-year high. Manish Pajni, head of the Punjab government’s grain procurement department in Khanna, supports the export ban on the grounds that wholesale prices could reach Rs 3,000 a tonne if the government does not intervene.
Workers load sacks of wheat onto a truck at a warehouse in Khana, Punjab state, on May 18. picture: AFP
Raj Sood, a wheat trader, said the government should monitor and analyse the situation rather than suddenly imposing an export ban and causing market volatility.
“The market has been under pressure from the crop failure crisis and the government has issued such a reckless ban,” Sood said. “Of course, major wheat exporters like Cargill, ITC and Glencore will suffer a lot. But small traders, farmers will also suffer.”
Many traders in Khanna believe that this measure is only temporary, as the market cannot avoid the law of supply and demand. Flour mill owner Divernder Verma usually buys ingredients from government warehouses, but says supplies are now low.
“Now we don’t expect them to supply any more. Wheat supplies will be tight soon,” Verma said. Private wholesalers will charge more, causing prices for bread and wheat products to continue to rise.
Hong Han (according to AFP)
