Rise in bread price blames severe heat wave in India

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Indian farmers estimate that between 10 and 15% of their crops have been lost due to the heat wave

Narendra Modi, Prime Minister of India
Narendra Modi, Prime Minister of IndiaEFE
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India offered to feed the world when war broke out in Ukraine. to the prime minister Narendra Modi He filled his mouth with bragging that his country had enough food to satisfy the hunger of 1.4 billion people and was ready to send its abundant grain reserves to countries in need.

The same is what Modi said in a conversation with US President Joe Biden in April after exports from the Black Sea region declined due to the European breadbasket, Russian invasion of Ukraine and Western sanctions raining on Moscow. Both countries account for about a third of the world’s annual wheat sales.

India, which has spent since the start of the war without condemning the Russian aggression and bolstered its international image by buying oil from Putin’s country, taking advantage of huge discounts, through cash tenders, to fill up on grain at low prices. Wanted to take a step to shine. Many countries have pantry reasonable, exported a record 10 million tonnes this year. But Modi did not expect such unwanted and unexpected extreme heat wave Will ruin your plans.

It had been more than a century since the temperature in the Indian spring never exceeded 49 degrees. Is going through fifth heat wave since March, Summer is a few months away and there is still a long way to go before the monsoon sweats dry up. These extreme temperatures, in addition to many deaths from heat stroke, are also crippling the wheat crop on which the world relied to address the global shortage after the war in Ukraine.

According to Monica Tothova, economist at the Food and Agriculture Organization of the United Nations, Indian farmers estimate that between 10 and 15% of their crops have been lost due to the heat wave. Wheat crop yield is reduced by up to 50% Some areas were most affected by higher temperatures, which pushed up the domestic price of basic food items.

This situation prompted Prime Minister Modi to announce last Saturday that India would ban exports of its grain until further notice. The country represents about 5% of world exports. The only wheat going outside the borders of the South Asian nation would be through letters of credit that were already issued based on the food security requirements of the countries in demand.

The shock of the ban shook the markets on Monday: wheat prices rose nearly 6%. To be precise: the benchmark wheat index rose as much as 5.9% in Chicago, its highest in two months. The price already high because of the war, touched 435 euro per tonne on opening of european market, This represents another blow to an already shrinking global supply chain that will drive up prices of basic products such as bread or noodles.

India’s extreme measure did not go down well with its big buyers. After the G-7 leaders’ weekend meeting in Germany, German Agriculture Minister Kem Ozdemir threw a dart at India. “If the whole world starts export restrictions or market closures, it will make the crisis worse,” Ozdemir said.

According to Ashok Gulati, professor of agriculture at the Indian Council for Research on International Economic Relations, India has the potential to export 16 million tonnes of wheat this year. Traders have signed contracts to export over 3 million tonnes between April and July in response to rising demand in the international market. “This will bring down world prices and reduce the burden on importing countries around the world,” says Gulati. But the export ban has made the situation worse.

A report from NomuraJapan’s largest investment bank, however, emphasizes that India’s decision will have significant global impact in many low-income developing countries, primarily in Asia and the Middle East. “The impact will be felt disproportionately by developing countries, although the Indian government has left the option of exporting to vulnerable countries open,” the report said.

From the United States and the European Union, EU trade chief Valdis Dombrowski assured in an interview with CNBC on Sunday, they are very concerned that these new sanctions from India increase the risk of a world hunger crisis.

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