India is considering restricting wheat exports as severe heat waves have damaged crops, prompting the government to prioritize domestic consumption over supplying the grain to the world.
The country experienced its hottest March on record, shriveling India’s wheat crop during a crucial growth period. The government slashed its production estimate for the current season to 105 million tons from a record 111 million tons forecast earlier, the food ministry said on Wednesday.
To safeguard domestic supplies, the government is considering limiting wheat exports, according to a person with knowledge of the matter. Top officials are discussing the move and will recommend it to Prime Minister Narendra Modi, who will then make the decision, said the person, who asked not to be named as the information is private.
One of the strategies, the person said, could be setting a minimum export price so wheat cannot be shipped overseas below this level.
This way, without outrightly banning it, the government can boost domestic supply and keep a check on prices, according to the person.
An agriculture ministry spokesperson was not immediately available to comment. A finance ministry spokesperson did not answer calls, while the trade ministry did not immediately respond to an email seeking comment.
Curbing exports would be a hit to India’s ambition to cash in on the rally in global wheat prices after Russia’s war in Ukraine upended trade flows out of the critical Black Sea breadbasket region.
Importing nations have looked to India for supplies, with top buyer Egypt recently approving the South Asian nation as an origin for wheat imports.
The move would also add to a wave of crop protectionism around the world as governments seek to protect their own food supply amid soaring prices and fears of shortages. That has the potential to worsen global food inflation, which is already at a record and surging at a rampant pace.
The fall in production is raising concerns for the domestic market, with millions depending on farming as their main livelihood and food source. Weaker output will hurt farmers’ incomes. The government also buys wheat for its welfare program, which provides subsidized food to two-thirds of the population.
In a sign that Indian authorities are worried about surging inflation, the central bank raised its key interest rate in a surprise move on Wednesday, sending bonds and stocks tumbling. Persistent inflation pressures are becoming more acute, particularly on food, Governor Shaktikanta Das said in an online briefing, adding there’s a risk that prices stay at this level for “too long.”
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