Amid global food nationalism, how India's wheat export ban is different

With dwindling food stocks across the world amid the Russia-Ukraine war, India banned the export of wheat because of record-high domestic inflation and an intense heatwave, which destroyed the crop in many places.

The decision has evoked reactions from politicians and world leaders, many requesting and urging India to rethink its wheat export ban.

Speaking at Globsec 2022 Bratislava forum, Indian External Affairs Minister S Jaishankar revealed that the ban was imposed in order to prevent diversion to high-income countries and to not give those involved in speculative trade open access to the Indian market.

Jaishankar said India has been exporting wheat to several countries. "But what we then saw was a kind of run on our wheat, a large part of it done by international traders based out of Singapore and, maybe to some degree, Dubai and the result was the low-income countries, many of whom were our traditional buyers like neighbours Bangladesh, Sri Lanka and Nepal, the Gulf buys regularly Yemen Sudan, low-income buyers were being squeezed out," he said.

Jaishankar said wheat was being stocked for being traded, and, in a way, India's goodwill was being used for speculative trading.

"So we had to do something to stop that. Prevent diversion to high-income countries with a greater possibility to buy like with vaccines," he said.

Jaishankar said the decision was required to not give the speculators open access to the Indian market so that Indian customers and the least developing countries get the supplies.

He said India is still open to supplying wheat to any deserving country.

"What happened with the vaccines, we do not want to let happen the same with the wheat. Rich got vaccinated and the poor were left to God," said Jaishankar.

The government's decision to ban wheat exports will help in crushing attempts by certain foreign players to hoard Indian wheat for price manipulation in global markets, according to sources.

With this move, they said, India wants to ensure fair and proper use of its wheat stocks to address global needs, particularly of the more needy countries.

"The ban will crush attempts to hoard Indian wheat for price manipulation. It will also counter food inflation," a source said.

According to industry sources, Chinese traders were trying to manipulate the global market.

Indian wheat will now go to the needy countries, they noted.

India has banned wheat exports with immediate effect as part of measures to control rising domestic prices, according to an official notification.

India is a huge wheat producer — most of the grain is used to feed its population of 1.3 billion.

In mid-February, nearly a month before the recent hot spell, the government said India was on course to harvest an all-time high of 111.32 million tonnes of the grain, up from the previous year’s 109.59 million tonnes, reported Reuters.

Government data shows that India ranked 19th in 2020, 35th in 2019, 36th in 2018 and 2017, and 37th in 2016 when it came to wheat exporting countries. This shows that India has an insignificant share (0.47%) when it comes to wheat exports.

Figures from the Food and Agriculture Organization of the United Nations show that Russia exported 18.78% of wheat to the world in 2020, followed by the United States (13.16%), Canada 13.15%) and Ukraine with 9.09%.

The heatwave has caused irreparable damage to the wheat crop and it is now expected that India’s wheat output for the year will be 105 million tonnes.

Indian officials have also reportedly pointed out the wastage of food by other countries.

As per United Nations Environment Programme’s (UNEP) Food Waste Index 2021, developed Countries like the USA (59), Japan (64), Italy (67), Germany (75), etc all have higher food wastage compared to India.

While much has been said about India’s wheat ban export, it is not the only country to impose food trade restrictions.

Countries, including Egypt, Turkey, and Kuwait have also exercised export restrictions, giving rise to fears of so-called “food nationalism” by governments.

In May, Malaysia’s prime minister Ismail Sabri Yaakob said the South East Asian country will stop exporting as many as 3.6 million chickens every month “until domestic prices and production stabilise”.

Earlier, palm oil prices had also surged in recent weeks when Indonesia, the top producer of the ingredient used in everything from processed food to soap, stopped exports for three weeks to bring down local prices of cooking oil. The ban was lifted on Monday.

The rising prices have also led to fears of a global food crisis.

According to UN figures, the number of severely food-insecure people has doubled in the past two years, from 135 million pre-pandemic to 276 million today.