The government’s abrupt notification on 13 May to ban export of wheat has caught the trade by surprise. Anil Jaising Ghanvat, former President of the Shetkari Sanghatana, a pro-market farmers’ union with a stronghold in Maharashtra, has denounced it.
It says the move will cause farmers to subsidise consumers as it will suppress domestic prices and shrink farmers’ profits. The government, he says, should have instead bought wheat in the open market like private traders and subsidised it for consumers with taxpayers’ money. The ban will shift the government’s obligation to consumers onto farmers.
Ghanvat is President of Swatantra Bharat Party, the political wing of the Sanghatana. He was member of the committee which the Supreme Court had set up to review three farm laws which the government had withdrawn last November after a year-long agitation by farmers.
At a press conference on 14 May, the secretaries of the ministries of food, commerce and agriculture were at pains to convey that the action was not impulsive, whimsical or panicky. But they were on shaky grounds because just about a week ago, the officials had said the government was not contemplating an export ban.
Just a day before, on 12 May, the commerce ministry had issued a press release saying a trade delegation led by Apeda, the official agricultural export promotion agency, would be visiting about a dozen countries to find buyers for Indian wheat. The government had said it wanted to export wheat worth $10 billion this year.
Giving a positive spin on the decision to ban wheat exports, the officials said the government’s priority was to keep prices of staples low for the sake of the poor. Retail wheat prices, they said, had risen 19 percent on average between the first week of May and the same time last year. In the south, wheat flour prices were about 40 percent higher.
The officials said high temperatures in March had damaged the wheat crop in Punjab and Haryana. The temperature rise had happened at the grain filling stage in standing crop; there was a lot of shrivelled gain. But the output has not dropped much.
It is expected to be around 105 million tonnes against last year’s production of 109 million tonnes. But there is a big drop in procurement for the public distribution system. Against 43.3 million tonnes procured last year by around mid-June, procurement so far this year is 18 million tonnes and is likely to end at 18.5 million tonnes.
Wheat exports from Ukraine, a major producer, have been affected by the war. A few other countries have banned exports or imposed export taxes. Global wheat prices are high — in the range of $450-$480 a tonne. Sentiment and speculation were pushing up domestic prices, the officials said.
The ban would not affect India’s credibility as a supplier in the international market, the officials said. In April, about 1.2 million tonnes had been exported. Exporters with firm orders and irrevocable letters of credit would be allowed to export. About 1.1 million tonnes more was expected to be shipped out this month, they said.
But just a month ago, on 13 April, while addressing a rally in Gujarat, the Prime Minister had said that US President Joe Biden had called him and he had said that India was willing to feed the world if the World Trade Organisation allows, as it had ample stock.