India’s wheat export ban will hit these countries hardest

India’s wheat export ban will hit these countries hardest

India’s decision to ban the export of wheat with immediate and indefinite effect will have significant global implications with a number of low-income developing countries, primarily those in Asia and the Middle East, being affected.

“The impact will be felt disproportionately by low-income developing countries, although the Indian government has left open the option of exporting to vulnerable countries,” said a Nomura report.

Bangladesh would be among the most affected countries, accounting for 55.9% of India’s total wheat exports, followed by Sri Lanka (7.9%), United Arab Emirates (6.9%), Indonesia (5 .9%), Yemen (5.3%) and the Philippines (5.1%). percent), according to Nomura’s report.

Among the other countries that would see the impact are Nepal, Korea, Qatar, Oman and Malaysia.

India wheat exports by destination from March 2021 to February 2022 (in%):

Source: Ministry of Commerce and Nomura Global Economics

“In Asia, except for Australia and India, most other economies rely on imported wheat for domestic consumption and are at risk of increasing global wheat prices, even if they don’t import directly from India,” he says. The report.

“We see rising food inflation as an upside risk to the overall inflation outlook in Asia. Food has a greater weight in the consumption baskets of emerging Asian countries, ”she added.

On Saturday, India banned wheat exports with immediate effect as part of the government’s efforts to rein in rising domestic prices and as the countrywide heat wave hits domestic production. “The wheat export policy is prohibited with immediate effect,” said the General Directorate of Foreign Trade (DGFT).

The DGFT clarified that wheat exports will only be allowed if the government grants permission to meet the food security needs of other countries based on the request of their governments.

India’s wheat export ban would put significant pressure on world wheat prices, which have already been rising due to rising energy costs and the war between Russia and Ukraine.

According to estimates from the United States Department of Agriculture (USDA), cited by Nomura, India is the eighth largest wheat exporter in the world and accounted for 4.1 percent of total global wheat exports in 2020-21. The country produced 109.6 metric tons™ of wheat in 2021-22, of which 8.2 million tons were exported, compared to 2.6 million exports in 2020-21.

With India’s wheat export ban, USDA export projections for 2022-23, already affected by the war in Ukraine, are likely to be revised downwards.

Leading exporters of wheat worldwide (in millions of metric tons):

Source: USDA WASDE (May 2022) and Nomura Global Economics

However, the impact of the wheat export ban on India’s domestic food inflation is likely to be moderate, according to the Nomura report.

“This export ban is a preventive step and can prevent local wheat prices from increasing substantially; however, with domestic wheat production likely limited by the heat wave, local wheat prices may not moderate significantly. If India’s wheat ban leads to higher prices of substitutes like rice, then there could be upward pressure on prices of other foods,” the report says.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.