Against the background of the war in Ukraine, India hoped to become the world leader in wheat exports, but it did not work out.
Indian Prime Minister Narendra Modi stated , that his country is ready to “feed the world” after Russia's invasion of Ukraine. But less than four months later, the government needs to consider grain imports. Bloomberg writes about it.
In March, India was hit by a record-breaking heat wave that reduced production and raised local prices, making life more expensive for hundreds of millions of Indians. Signs that an unprecedented wheat harvest would not be forthcoming prompted the government to limit exports in mid-May. Government reserves fell to their lowest level in 14 years in August, and consumer inflation for wheat is nearly 12%. The shortage and rising prices force the authorities to prepare for purchases abroad. Government officials are discussing the possibility of reducing or canceling the 40% tax on wheat imports.
“With domestic wholesale wheat prices lower than global prices, lowering import duties will also go a long way in making this option viable,” said Sonal Varma, economist at Nomura Holdings Inc.
Also read: 'Hunger grips the world ” – none of the countries that depend on grain from Ukraine protested against the war
In early March, wheat prices in Chicago jumped to almost $14 a bushel as the war in Ukraine threatened the main source world exports. Prices have now returned to below $8, easing some pressure on emerging economies.
Despite being the world's second largest producer of wheat, India has never been a major exporter. Nor has it ever imported much, buying about 0.02% of its production abroad annually. The country was practically self-sufficient in this matter.
Read also: China bought more than half of all the world's wheat and provokes global food prices
Now the authorities expect the 2021-22 harvest to be about 107 million tons, which is lower than the February forecast of 111 million. This may still be too optimistic, as traders are forecasting 98 to 102 million tons.
Recall that the food situation began to improve little by little when the “grain corridors” were activated and Ukraine started exporting agricultural products again, in particular grain.
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Let us also remind you that the USA decided to buy 150 thousand tons of wheat from Ukraine in order to avoid world hunger and allocated 68 million dollars.
