India export ban: Pressure now brews over wheat
"We have kept the window open for [our] neighbours. We have also kept the window open for a large number of vulnerable countries if their governments do make such requests. The order is to divert trade to the needy, poor and the vulnerable countries,"
After edible oil, wheat, the second-most consumed cereal in Bangladesh, is posing to be the next pressure point for food inflation, which in March leapt to its highest level since October 2020.
Yesterday, a day after India announced a shock ban on wheat exports, the prices of the grain shot up here, in a testament to the interconnected nature and fragility of agricultural systems that have been exposed by a perfect storm of war and weather.
At Chattogram's Khatunganj, the country's largest wholesale market, the price of wheat has increased by as much as 25 percent. The Indian wheat is selling for Tk 1,500 a maund (about 37.5 kilograms), up from Tk 1,200 on Thursday.
The Canadian wheat's price too increased: by about Tk 250 to Tk 2,050-Tk 2,080.
It was the same case similar all over the country, including the capital, according to traders.
Bangladesh, which depends on imports to meet 86 percent of its annual requirement of 85 lakh tonnes of wheat, started procuring the cereal in significant volumes from India in 2020.
And in the financial year that ended on March 31, Bangladesh was the largest importer of wheat from India, accounting for nearly half of the neighbouring country's record seven million tonnes of wheat exports, according to estimates by the Directorate General of Foreign Trade under the Commerce Ministry.
The Indian export restriction comes after searing heat in March and April, where temperatures of up to 45C hit large parts of India's wheat belt, have heightened concerns about the country's domestic supply.
Subsequently, the wheat price in India, where inflation has hit an eight-year high, has risen to record levels, going well above the government's minimum support price of Rs 20,150 in some spot markets.
However, Indian Commerce Secretary BVR Subrahmanyam yesterday calmed the fears of its neighbours.
"We have kept the window open for [our] neighbours. We have also kept the window open for a large number of vulnerable countries if their governments do make such requests. The order is to divert trade to the needy, poor and the vulnerable countries," he told the media, reports our New Delhi correspondent.
He, however, did not name any country.
Indian officials said while the ban on wheat export may hit private traders, it is unlikely to affect government-to-government deals. For this, Dhaka would have to reach out to New Delhi through official channels.
The world's second-biggest wheat producer is likely to be sensitive to the concerns and requirements of Bangladesh and Nepal, they added.
However, wheat import through the Hili land port in Hakimpur upazila was on pause yesterday because of the Indian government's export restriction even though the ban is not applicable for shipments for which letters of credit had already been issued, reports our Dinajpur correspondent.
The Indian customs authority did not get any official order on this, so they did not allow any wheat-loaded truck to cross the border, said Harun Ur Rashid, the president of Importers and Exporters Group of Hili land port.
Consignments of two lakh tonnes of wheat through the land port have become uncertain now after India's decision, he added.
Abul Bashar, chairman of BSM Group, one of the country's leading wheat importers, remains hopeful that there would not be any crisis for wheat and flour as the country meets 15-20 percent of the demand from domestic production and the local harvests will be available in the market by the end of the month.
In addition, Canada and Australia will go for wheat harvesting in the next one and a half months.
Over the last decade, most of the country's wheat imports were from India, Russia, Canada and Ukraine.
"But our dependence on India has been increasing over the last few years due to low prices and short shipment time," he added.
There is still no alternative to increasing contacts with alternative countries at the government and private levels, he added.
"Options for Bangladesh are low. Canada, Australia and the US could be options but the prices there are too high for us to afford," said Taslim Shahriar, senior assistant general manager of Meghna Group of Industries.
He went on to urge the government to take steps to ensure import through government-to-government contracts.
In Bangladesh, wheat is imported from 16 countries, including India, Canada, Russia, Ukraine, the US, Australia, Cyprus, Italy, Argentina, Estonia and Belgium, according to the data from the National Bureau of Revenue.
Regardless, a global wheat supply shortage is brewing because of the Russian invasion of Ukraine.
Ukraine and Russia together account for nearly 30 percent of the exports of the world's wheat.
Russia, the world's biggest exporter of wheat, has largely been unable to export food because of sanctions that have effectively cut it off financially, while Ukraine has been cut off physically after Russia blocked the Black Sea for exports.
And Ukraine, the fifth-largest exporter, lacks enough rail cars to transport food overland.
India was looking to fill the supply gap in the international wheat markets left by the two countries but the export restriction amid the drought is derailing its designs.
Inventories are already tight in the US and Canada, according to the UN, while Argentina is limited exports and Australia is already shipping at full shipping capacity.
Following India's announcement of the export ban on May 13, wheat futures in Chicago, the international benchmark, closed at $11.6725 a bushel, up 50 percent from the start of the year, while the European wheat futures market was 410.75 euros a tonne, just of its record high in March.
Meanwhile, poor harvests in China, the world's biggest producer and consumer of wheat, is a major cause for concern: the country has the world's largest foreign currency reserves, so it can buy as much wheat as it needs from the world markets.
Pallab Bhattacharya, Kongkon Karmaker, Mohammad Suman and Sukanta Halder contributed to the report