India has defended its decision to ban exports of wheat after initially saying it would help ease a global supply crunch created by the war in Ukraine.
The Indian government imposed the ban two weeks ago amid concerns that an early heat wave has blighted harvests in the country and caused domestic prices to surge to a record high.
Indian Commerce and Industry Minister Piyush Goyal said Wednesday that officials were worried about the “price stability” of the staple grain.
“Today, 22 countries of Europe have regulations on exports to protect their food security. Different countries in different points in time had to take extraordinary measures in public interest,” Goyal told the World Economic Forum in Davos, Switzerland.
The export ban aims to cool domestic prices as India, which like other countries, is battling inflation, which at 7.8 percent in April, was the highest in eight years.
The government on Wednesday also announced that it would restrict exports of sugar to 10 million tons – another move that aims at keeping domestic prices stable. India is the world’s biggest producer of sugar and second biggest exporter after Brazil.
Such restrictions are being seen as a part of “food protectionism” at a time when world supplies are tightening, and the United Nations has warned about the specter of a global food shortage in coming months.
But it is the ban on wheat that has raised most concerns and prompted calls to reconsider it.
In an interview to broadcaster NDTV, International Monetary Fund chief Kristalina Georgieva urged India to reverse the ban, saying that the country could play a key role in international food security and global stability.
“I would beg India to reconsider as soon as possible because the more countries step into export restrictions, the more others would be tempted to do so and we would end up as a global community less equipped to deal with the crisis,” she said at Davos.
However, Minister Goyal has said that India’s export regulations on wheat will not impact global markets. “India’s wheat exports are less than one percent of global trade,” he said. “We continue to allow exports to vulnerable countries and neighbors.”
India, which is the world’s second biggest wheat producer, has not traditionally been a big supplier of wheat to global markets.
But the government had announced targets of increasing exports to about 10 to 15 million tons this year and had made upbeat statements about helping countries facing shortages.
“We already have enough food for our people, but our farmers seem to have made arrangements to feed the world,” Prime Minister Narendra Modi said in April.
Just two days before announcing the ban, the government had announced that it would send delegations to nine countries to promote wheat exports.
Several agricultural experts in India have called the abrupt reversal a “knee jerk reaction.”
“This kind of a flip-flop dents India’s credibility in the world. You announce a policy and then do just the opposite,” says Harish Damodaran, agriculture editor at the Indian Express newspaper. “While the reasons may be justified, I think they could have restricted exports in a gradual way. In the long term, this will hurt the country’s ability to build markets for its agricultural crops.”
The sudden decision came after the government, which purchases vast quantities of wheat for a massive food security program that reaches some 800 million people, procured lower quantities of the staple crop this year.
That was partly due to lesser crop output and partly because farmers sold more wheat this year to private traders, who were buying at higher prices as they looked ahead to buoyant exports.
While estimates vary, farmers say the heat wave that struck early in March shriveled their harvests by 15 to 20 percent.
The ban has also hurt farmers who had this year hoped to benefit from higher global prices. “It was a double whammy for them. They have been hit because their harvests were affected and now they also cannot benefit from higher global prices,” pointed out Damodaran.