High Demand And Low Supply of Wheat Amidst Ban

High Demand And Low Supply of Wheat Amidst Ban High Demand And Low Supply of Wheat Amidst Ban

On 13th May 2022, the government of India imposed a ban on the export of wheat with immediate effect. The government has put all types of wheat exports from ‘free’ to ‘prohibited’ category. This step has been taken citing food security as a reason in neighbouring countries. However, exports to troubled countries like Sri Lanka will continue.

India is one of the top producers of wheat in the world. Due to the Ukraine-Russia war, there is a huge demand for wheat in the global market. Ukraine and Russia used to export wheat to most of the countries, but due to this war, export has stopped and the demand for wheat is not being met. On the other hand, the wheat crop in India has been weak and domestic demand for wheat has also increased. It is believed that the government has put this ban in place to control the rising prices of wheat and flour in the country.

Boom in export

India exported a total of 7 million tonnes of wheat in the financial year 2021-22. In April alone, 1.4 million tonnes of wheat was exported. Wheat demand from India has increased due to the Ukraine-Russia war, while the supply is low due to limited crop this year.

In April, Consumer price inflation (CPI) hit an eight-year high and reached 7.79%. At the same time, retail food inflation rose to 8.38%. Rising inflation is also one of the reasons behind banning wheat export. 

Decrease in wheat procurement

According to government data, in this current year i.e 2022-23, till May 14, the government has procured only 18 million tonnes of wheat. Last year during the same time, the government procured 36.7 million tonnes of wheat. It means 18.7 million tonnes less wheat is procured in the current year as compared to last year. According to official data, on 8th May 2022, the price of one kg of flour was Rs 33, which is 13% more than this time last year.

Hot weather impact

The biggest reason for the poor wheat crop this year is the weather. The sudden rise in temperature in the month of March has caused great damage to the crops. Starch, protein and other dry matter accumulate in the wheat crop in March itself. For this, the temperature should not exceed 30°C. At 30° C, grains start appearing and their weight also starts increasing. But this year the temperature had crossed 35° C in mid-March and reached 40° C by the end of March. As a result, grains ripened prematurely and shrinked in size also.

Foreign countries have expressed their disagreement with India’s decision. Now let’s wait and watch what will be the effect of this decision taken by the Government of India in both domestic and international markets. Also, whether the government will reconsider this decision.