Government slightly eases wheat export ban

By Nayan Dave and Banikinkar Pattanayak

The government on Tuesday partially eased an earlier order and allowed despatches of wheat consignments that were either handed over to the Customs authorities for examination or registered in their systems by May 13, when a surprise ban on the grain’s exports was announced.

The move is expected to facilitate clearance of about 0.35 million tonne (mt) of wheat from Kandla port itself, according to Dinesh Gupta, president of Kandla Custom Brokers’ Association (KCBA). This is still only a fraction of the estimated 2-2.2 mt of the grain currently at various ports or in transit.

About 6,000 wheat-laden trucks, parked in the Kandla-Gandhidham area of Gujarat, are stranded for want of permission from authorities to load them into vessels, said Sanjay Dave, a Customs broker. “A train rake is also stranded and waiting to be unloaded near Gandhidham,” he added. The problem is some trucks carrying wheat stocks are still arriving at the ports, says Surojit Chakraborty, vice-president of the KCBA.

Of course, since supplies that are backed by letters of credit, typically payment guarantees, issued before May 13 are to be allowed (apart from government-to-government deals) in accordance with the earlier notification, another 0.35-0.4 mt can be shipped out, the KCBA’s Gupta added.

About 2 mt of wheat were already shipped out this fiscal before the ban was announced.

The directorate general of foreign trade has also decided to permit a wheat consignment of 61,500 tonne for Egypt (of which 17,160 tonne was yet to be loaded at the Kandla port), following a request from Cairo, according to an official statement. The supplier, Mera International India, too, had submitted a representation.

In a surprise move, India on May 13 banned wheat exports, just weeks after planning to ship out at least 10 mt to partly fill in a gap created by the conflict between Russia and Ukraine, which together had exported as much as 53 mt of wheat and meslin (a mixture of wheat and rye) in 2021.

The move was necessitated by an expected crash in wheat harvest from the agriculture ministry’s February forecast of as much as 111.3 million tonne, mainly due to intense heat wave since late March. Some analysts now expect output to plunge to just about 90-95 million tonne. Importantly, the government’s wheat procurement target will fall way short of the initial aim of 44 million tonne and may settle at about 18.5 million tonne, the lowest in well over a decade.

The ban caused the already-elevated global wheat prices to shoot up further, while local rates dropped. Global wheat prices jumped 6% on Monday, with Europe witnessing a new high of 435 euros ($453) per tonne, up from the previous peak of 422 euros on Friday. In the domestic market, however, prices dropped by 4-8%, depending on the location.

“Following encouragement by the government to export wheat, large infrastructure, including food storage warehouses and facilities to clean wheat grains, were set up by a number of private firms. More than 75% of warehouses in the Kandla-Gandhidham area of Gujarat were filled with wheat stocks,” says KCBA’s Gupta.

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