Boon to ban: How the wheat export story changed in two months

News: On May 13, the government effectively banned the export of wheat.

Why were wheat exports banned?

On May 4, the government revised down its wheat production estimates from 111.32 million tonnes (MT) to 105 MT for the crop year ending June.

– 18 MT of wheat were procured till May 14 of the ongoing 2022-23 marketing year, much less than the 36.7 MT in the year-ago period.

So,

• the decrease in production estimates and
• a considerable fall in wheat procurement

raised concerns that domestic consumption may get impacted.

Moreover, the local prices started to rise. In March, the wholesale inflation of wheat crossed the 14% mark, though it eased a bit to about 10% in April.

In April, retail inflation of wheat flour accelerated to 9.59% from an already higher 7.77% in March. As of May 17, the average retail price of wheat flour was ₹33.05 per kg. The maximum price had touched ₹59/kg.

These factors forced the government to ban wheat exports on May 13, two days after the decision to send delegates to nine countries to explore the option of enhancing exports was taken.

What led to the decrease in production?

The extreme temperatures recorded in March and April, across north India, were the reason behind the sudden turnaround of the government. For instance, across Punjab, between April 8 and 14, the maximum temperature was over 6°C higher than the usual, compared to the long period average.

The extreme heat led to a marked decrease in wheat yields across north India. Hence, the wheat arrivals in Punjab’s mandis were 20% lower in the first twenty days of the 2022 season compared to the same period in 2021.

Source: This post is based on the article “Boon to ban: How the wheat export story changed in two months” published in The Hindu on 18th May 22.