A perfect storm of inflation, climate change, COVID-19, and conflict . . .
Last Saturday, India banned wheat exports with immediate effect in a move that could drive global prices to record peaks and threaten widespread hunger across Asia and Africa. The ban comes as rising food and energy prices pushed India’s annual retail inflation to an eight-year high last month, and a scorching heatwave crippled crop output. India’s wheat stocks have also been strained by the distribution of free grain to some 800 million people during the pandemic. To make matters worse, global buyers were banking on India, the world’s second-largest wheat producer, to fill the gap after Russia’s invasion of Ukraine caused exports from the Black Sea region to plunge. The two European countries together account for almost one-third of the world’s wheat exports.
G7 condemns while China defends . . .
Agriculture ministers from the G7 condemned the decision, fearing it may exacerbate existing food shortages and set a troubling precedent of food protectionism. Calling on India to fulfil its responsibility as a G20 member, the German agriculture minister also warned, “if everyone starts to impose export restrictions or to close markets, that would worsen the crisis.” International reproach was particularly swift as Indian Prime Minister Narendra Modi had promised to “feed the world” amidst the precariousness of global agricultural markets. India has defended its ban, citing domestic food security and inflation. Despite the two countries’ military stand-off at their border, China has also come to India's defence, calling on G7 countries to increase their exports to stabilize international supplies.
Consumers in Asia suffer . . .
Global wheat prices rose almost six per cent following the announcement. Even before Saturday, the World Bank had forecast wheat prices would jump 42 per cent over last year’s prices to C$575 a tonne. The ban will be felt disproportionately by consumers in low-income developing countries in Asia, as Bangladesh and Sri Lanka are the top two destinations for Indian wheat exports. Wheat is the main ingredient in many traditional Asian foods, from naan and noodles to dumpling wrappers. As the world’s second-largest wheat exporter, Canada will be watching closely, particularly for opportunities to add supply to international wheat markets. Growers in the Canadian Prairies, however, are encountering unfavourable conditions this spring as Manitoba faces excess moisture in the ground and Alberta struggles with drought conditions.