Indian farmers see bleak harvest after wheat export ban

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When New Delhi imposed a ban on wheat shipments as prices skyrocketed due to the war in Ukraine, it sparked international outrage and drove the commodity further higher.

Farmers and dealers in India are now enraged that they have been denied a profit as local prices have plunged.

Despite the fact that India is the world's second-largest wheat grower, the government, which is also the country's largest buyer of grain, stated that it decided to defend food security for its massive population over inflation worries.

The decision, along with declining global supplies from Russia and Ukraine, two of the world's top five wheat producers, propelled prices to all-time highs on Chicago and European commodity exchanges.

However, prices fell in Asia's largest grain market in Khanna, in India's breadbasket state of Punjab.

Thousands of farmers from the wheat-growing region sell their goods at the facility, which is dominated by a dozen massive storage structures the size of a football field.

Prices for 100 kilos of wheat dropped from 2,300 rupees (about $30) before the export restriction to 2,015 rupees – the government-set minimum price at which it buys grain for its huge public distribution system.

Hundreds of millions of small farmers in India live on the edge, exposed to the whims of the weather, and those in Punjab were already suffering from crop losses caused by a severe heatwave.

They claim that the price drop reflects the difference between a large payment and heartbreak.

Navtej Singh, a farmer, preserved half of his 60-tonne wheat harvest to sell during the lean season when prices generally jump and is shocked by the government's decision.

He described the ban to AFP as a "shock", adding that "the price has dropped to the lowest and doesn't even cover our expenses. I can't even wait for a day."

According to him, authorities acted "selfishly" and the ban has made life more difficult.

Wheat is the second most-produced grain in the world after corn; now the whole world might face a wheat supply shortage due to the #Ukrainian crisis and the sanctions imposed on #Russia.#Ukraine #RussiaUkraine pic.twitter.com/aNkRuR4cj7

— Al Mayadeen English (@MayadeenEnglish) March 2, 2022

Heatwaves

Last month, Prime Minister Narendra Modi claimed to assist bridge the global wheat gap and "feed the world."

Extreme weather conditions, on the other hand, are becoming more common, a phenomenon that scientists attribute to climate change. Following a heatwave in Punjab, the national crop was four million tonnes lower than predicted.

As food security plans established during the coronavirus epidemic are reduced, federal and state authorities are decreasing procurement for the public distribution system, which supplies free and heavily subsidized grains to almost 800 million people.

Despite this, retail wheat flour prices are at a 12-year high, and Manish Pajni, head of the Punjab government's grain procurement department in Khanna, has endorsed the restriction, claiming that wholesale rates might have reached 3,000 rupees if the embargo had not been implemented.

However, trader Raj Sood believes the government should have taken a wait-and-see approach before immediately suspending shipments and generating market instability.

"The market was already under stress from the harvest crisis and, without a thought, the government came up with the ban," he said.

"No doubt the major losses will be incurred by big exporters like Cargill, ITC, and Glencore, but small traders and farmers will also be impacted."

Many Khanna businesspeople believe the move will only have a limited impact because supply and demand laws are inescapable.

Divender Verma, the proprietor of a flour mill, generally gets his raw materials from government inventories, but he said they were running low.

"This time we do not hope they can provide for us. So the scenario for wheat is tight," according to Verma.

Private suppliers would undoubtedly charge more, he warned, pushing up the price of bread and other wheat products even higher.