India’s wheat ban hits where it hurts


Even before the start of the Russian-Ukrainian war, the price of a bundle of bread of various brands weighing 325-350 grams was 35 Tk, which is now 40 Tk

May 14, 2022, 10:45 p.m.

Last modification: May 14, 2022, 10:58 p.m.

Infographic: TBS


Infographic: TBS

From the first bite of the day of a roti at home or a naan at a roadside restaurant, to a midday snack of baked bread or a packet of biscuits with a cup of tea sweetened milk, wheat-based foods have been some of the top consumer choices. But those days are now over as the wheat market is about to turn unsavory.

Major industries and almost all consumer segments now face a very uncertain future following India’s sudden ban on wheat exports on Friday.

But it is the poorest who will be hit the hardest, despite a generous new round of food security guarantees given by government officials.

India’s Directorate General of Foreign Trade announced the wheat export ban on Friday, which came shortly after Bangladesh had already imported 27.15 lakh tonnes of wheat till March 1 of the fiscal year. In progress.

Food traders say that despite imports, there was still a demand gap of three million tonnes this year.

Similar to the rise in prices of other essential commodities, wheat prices have already started to rise in the country’s market immediately after the announcement of the export ban.

On Saturday, the price of wheat in the wholesale market rose by Tk 150 per maund, with traders hinting at a further increase if the international wheat market is destabilized.

Meanwhile, Food Ministry Secretary Mosammat Nazmunara Khanum said the ban will not affect the three lakh metric tonnes of wheat already contracted for import by Bangladesh.

Speaking to UNB, the secretary said a third of the amount, 1 lakh MT, was already on board

In the short term, the Indian embargo would have no effect on food security in Bangladesh, as enough wheat to meet domestic demand has already been imported or is in preparation.

The secretary further assured that at present the country’s wheat stock is sufficient to last until August and there would be no need to import wheat before then.

It would still be possible to import wheat from India at the government-to-government (G2G) level, as mentioned in the Indian wheat export ban notification, Nazmunara also pointed out.

This insurance, however, did not stem the rise in wheat prices.

Nazmunara further said that Bangladesh has also signed an agreement with Bulgaria to import wheat and is considering other exporters including Australia, Canada, Ukraine and Russia.

Although wheat can still be imported from Canada, the United States and European Union countries, these are commonly used for high-value food items including chanacur, pasta, burgers, pizza and cakes.

These products are not considered an important part of the diet, while corn is used for more widely consumed staples such as bread and biscuits.

Md Shafiqur Rahman Bhuiyan, president of the Bangladesh Auto Biscuits & Bread Manufacturers Association, said Indian wheat is used by low-income people.

An increase in wheat prices would therefore have a direct impact on the most economically disadvantaged group in the country.

Even before the start of the Russian-Ukrainian war, the price of a package of bread of various brands weighing 325-350 grams was 35 Tk, which is now 40 Tk.

The price of noodles has increased by more than 10% according to the brands, the price of biscuits having already increased.

Even a quick glance at restaurant prices shows that the price of a basic item like paratha has almost doubled while Tk5 parathas have disappeared from the menu.

Taslim Shahriar, senior managing director of Meghna Group, another giant in the country’s consumer goods market, told TBS that in this situation, people’s eating habits may change, with more and more consumers returning to fruit snacks. .

The official also said that rice production in the country is good and therefore can be considered as an alternative.

According to the Ministry of Food, Bangladesh’s annual wheat demand is about 7.5 million metric tons (MT), of which only one million MT is produced locally on average per year.

The remaining demand is met by importing wheat from India, Russia, Ukraine, Canada, Argentina and the United States, with most of it supplied by the private sector.

The government imports only half a million tonnes, with the private sector accounting for the other six million metric tonnes, the secretary said.

Bangladesh – the second fastest growing wheat importer in the world – buys around 36 lakh tonnes of wheat from India to meet its demand of 65 lakh tonnes of wheat annually.

Bangladesh also emerged as India’s top wheat export destination, with the largest share of more than 54% by volume and value in FY 2020-21, according to data from the Ministry of Commerce.

The rest comes from Russia and Ukraine, among others.

Ukraine, Russia, Canada, Argentina and the United States were the top five exporting countries of wheat to Bangladesh in the 2019-20 financial year.

A supply shortage in sight

India’s sudden ban on wheat exports has raised concerns about the future supply of the staple, as half of Bangladesh’s wheat needs come from its immediate neighbor since the war with the Russia has cut off supplies from Ukraine.

India halted new wheat shipments from Friday, citing lower yields due to drought that has put its own food security at risk, Bloomberg said.

Bangladesh’s G2G agreement for the purchase of the staple food to meet food security needs and shipments with irrevocable letters of credit, issued before May 13, will however still be permitted, according to the latest notification from the ministry. Indian Trade.

Meanwhile, India’s move, the latest in a global wave of food protectionism, was a swift reversal of the country’s ministry plan announced the day before to send trade delegations to a number of countries to explore markets export.

International traders have already pledged to export four million tonnes so far in 2022-23, while the full-year export target is set at a record 10 million tonnes, the ministry said. indian food may 4th.

India, the world’s second largest wheat producer after China, had emerged as an alternative source after wheat supplies from the two Black Sea breadbaskets – Ukraine and Russia were cut off after the war.

Russia and Ukraine accounted for a quarter of global wheat shipments before war cut off supplies from late February.

But India’s domestic challenges have grown more acute in recent weeks amid reports of wheat crop damage from hot weather in March, prompting the export ban.

Bangladesh had begun to reduce its dependence on Ukraine and rely more on Indian wheat even before the war.

The latest ban, however, will put Bangladesh in a race against major buyers like Egypt and Turkey who have recently chosen India as a new source of wheat.

“Our sourcing space is shrinking,” Biswajit Saha, director of CityGroup, one of the country’s largest raw materials suppliers, told The Business Standard.

“That means the global supply is down. Now we have to spend more to buy wheat. However, there are other concerns about whether the supply will even meet the demand,” he said. he declares.

Saha said rising wheat prices due to the Russian-Ukrainian war had already impacted the prices of many commodities, but it was hard to say how much the price would rise now that India banned exports.

Bangladesh is the fifth largest wheat importer in the world.

In the 2020-21 fiscal year, Bangladesh imported more than half of its wheat from Russia, Ukraine and India, which are now no longer options.

The country also imported 23% from Canada, 4% from the United States and 11% from several countries, including Australia.

As a global supplier, India exports 6.59 million tons of wheat to several countries including Bangladesh, Indonesia, Philippines, United Arab Emirates and Sri Lanka. Bangladesh alone imported 53% or 3.49 million tons of these exports.

Redwanur Rahman, managing director of Bashundhara Food and Beverage Ltd, said a closed source would mean lower supply. If the demand for a good that is not readily available does not decrease, prices will increase.

Greed or need?

Although India’s ban has just been announced, the price of wheat has already increased.

India’s Pratiman variety was being sold for 1,550 Tk for 37.32 kg on Saturday at Khatunganj, a consumer goods wholesale market. The same was priced at Tk 1,400 on Thursday.

Canadian wheat was sold at Tk 1,950 on Thursday, but is now sold at Tk 2,100 per quintal (equal to 100 kg).

Previously, before the start of the Russian military operation in Ukraine on February 24, the market price for Indian and Ukrainian wheat was 1,050 taka per quintal and Canadian wheat was 1,500 taka per quintal.

Thus, the price of wheat on the wholesale market has increased by 500 to 600 Tk in the last two and a half months.

Mohammad Selim, owner of Messrs. RM Store, a wheat trader in Khatunganj, said the market price of wheat has been rising since the Russian invasion of Ukraine.

Over the past two and a half months, commodity prices have risen 30 to 60 percent, he said.

Abul Bashar Chowdhury, Chairman of BSM Group, a wheat importer, said: “We have been meeting the country’s demand by importing wheat from India since the start of Russia’s military invasion of Ukraine. But on Friday, India banned the export of wheat.

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