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Explained: Why the US is angry over India’s wheat export ban?

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Explained: Why the US is angry over India’s wheat export ban?

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India imposed the ban on wheat exports on May 13 after US markets and banks closed on Friday to ensure exporters do not get the opportunity to open letters of credit

Explained: Why the US is angry over India’s wheat export ban?
India’s decision to impose a ban on wheat exports on May 13 miffed the US, which believes restrictions would exacerbate the global wheat crisis already in place due to the war in Ukraine.
Speaking after the G-7 meeting in Germany on Monday, US agriculture secretary Tom Vilsack expressed “deep concern” over India’s move, which has resulted in a rally in already elevated wheat prices.
Vilsack said India was constraining the ability to access wheat, which he defined as a “wrong thing at this time”, CNBCTV18 reported.
"What we need is transparency in the market, what we need is a market that is helping to get goods to those who are in need," Vilsack told reporters on a call.
India’s ban announcement came the same day the White House said it was in close touch with the country about efforts to rally the world to stand up against Russian aggression.
"We continue to remain in close touch with India about our efforts to rally the world to stand up against Russian aggression. That means implementing and abiding by sanctions that have been put in place," White House Press Secretary Jen Psaki had said on May 13.
Apart from the US, other leaders of the G-7 countries have also criticised India for the move, saying it could set a dangerous precedent of food protectionism.
Voicing concern over the global crisis, German agriculture minister Cem Ozdemir said the move also hurts Indian farmers as it would mean “a roller-coaster ride for prices.”
Why is the US angry?
India has imposed a curb on wheat exports at a time when Russia’s invasion of Ukraine has caused a seismic shift in the global wheat market.
The supply of wheat is getting dangerously low as shipments from the Black Sea region have dropped since late February.
India imposed the ban on wheat exports on May 13 after US markets and banks closed on Friday to ensure exporters do not get the opportunity to open letters of credit.
While visiting a family farm in Illinois on May 11, two days before India imposed the ban, US President Joe Biden said Ukraine had 20 million tonnes of grain, which they were unable to ship because Russia’s battleships were preventing them to access to Ukrainian ports.
“Our farmers are helping on both fronts -- reducing the price of food at home and expanding production and feeding the world in need,” Biden had said.
The US is among the key exporters of wheat in the world along with Europe, Canada and Russia. Between 2015 and 2020, US, Russia, Europe and Canada accounted for about 60 percent of world wheat exports, the report said quoting data by the US department of agriculture. However, these countries have faced significant wheat crop setbacks in recent seasons. The four regions have seen their collective export share drop to only 50.7 percent in the 2021-22 season, following a drought in North America and Europe, Reuters reported.
The United Nations has already warned of potential food shortages across the world.
Modi’s promise
Another reason for US’ ire is that the decision to ban wheat exports goes against Prime Minister Narendra Modi’s offer to supply food stock to the world, if the World Trade Organisation accords permission, a promise he had made to the US President Joe Biden in April this year.
“The world is facing a new problem now; the food stock of the world is getting empty, I was talking to the US President, and he also raised this issue. I suggested that if WTO gives permission, India is ready to supply food stock to the world from tomorrow,” PM Modi had said.
Why India banned exports?
India had planned to export 12 million tonnes of wheat in 2022-23, which was significantly higher than 7.2 million tonnes exported last year.
The country, which had harvested five consecutive record crops, was hoping for a bumper sixth crop at 111.32 million tonnes, Reuters reported. However, a heatwave and lack of rain during the crucial crop development phase have reduced yields, forcing officials to cut output estimate to 105 million tonnes.
Prices have often been above the government's fixed procurement price amid lower output and strong export demand. Welfare schemes run by states have slumped due to tight domestic supplies.
India would also like to avoid a situation that the country faced during 2004-05 when it exported wheat at a very cheap rate of below $150 a tonne but had to import the grain at higher costs later.
Also watch what experts have to say on wheat ban in the video below.
What the US plans to do?
The US hopes to convince India to “reconsider” its decision on wheat export ban as such restrictions would “exacerbate food shortages”, PTI reported.
Speaking at a press briefing in New York on Global Food security, US Ambassador to the UN Linda Thomas-Greenfield said: “We have seen the report of India's decision. We're encouraging countries not to restrict exports because we think any restrictions on exports will exacerbate the food shortages”.
The US, which is the president of the UN Security Council for this month, will host an event on food security this week. India will participate in the event.
Thomas-Greenfield said the US hopes that India would reconsider its decision after hearing the concerns being raised by other countries.
 
 
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