India tightens wheat flour exports in effort to ease record domestic prices

26 Aug 2022 --- Weathering inflationary pressures, India’s cabinet has passed new restrictions on exports of wheat flour to drive down local prices. The government warns that rising global temperatures are largely responsible for weighing down domestic wheat output and driving up prices.

This week, local wheat prices jumped to a record 24,500 rupees (US$307) per metric ton.

This is a rise of almost 20% from recent lows that came after India’s surprise ban on exports on May 14, which curbed the anticipation that India could fill a gap in the market created by a dive in agricultural exports from the Black Sea region, following Russia’s invasion of Ukraine in February.

“There was a policy not to prohibit or put any restrictions on the export of wheat flour,” states the Indian government. “Therefore, a partial modification of the policy was required to ensure food security and put a check on mounting prices.”

India is the world’s second-largest producer of wheat.

This week, local wheat prices jumped to a record 24,500 rupees (US$307) per metric ton.Latest protectionist move
India’s decision comes as its latest trade protectionist move, as the country preemptively set a limit on its sugar exports at 10 million metric tons per year last May.

The government shuttered the export of whole wheat in mid-May when a searing heatwave hindered agricultural productivity, which surged domestic prices to an all-time high.

That regulatory move bolstered demand for Indian wheat flour exports, which leaped 200% between April and July from last year. The government stated yesterday that this boosted local prices.

Before the ban, India had aimed to ship a record 10 million metric tons this year, most of which would have been shipped to other developing countries such as Indonesia, Thailand and the Philippines.

Next to the damaged harvests resulting from rising global temperatures, India’s vast wheat stocks – acting as a buffer against famine – were already strained by the distribution of free grain during the COVID-19 pandemic to around 800 million people.

The nation is negotiating a new free trade agreement with the UK, in a bid to “double trade by 2030.” Some industry players speculate that the new deal is likely to face considerable pressure to water down pesticide standards from India’s leadership, which is infamous for lobbying aggressively against protections.

By Benjamin Ferrer