The only thing India can do during this year’s global food crisis is not to make it worse for its own poor. As basic nutrition balloons costs everywhere, the country’s best bet is to return to a comprehensive system of state procurement and public distribution to soften the blow. But, in mid-April, Prime Minister Narendra Modi promised US President Joe Biden that India could feed the world. Recounting the talks, Modi said that India is ready to supply food stocks to the world from tomorrow if the WTO allows it.
However, as Modi was talking to Biden, the North Indian wheat crop was scorching by the scorching heat. The Ukraine war and the resultant grain shortage may have given India an opportunity to play a wider role in world trade, but climate change and a ripening chapati crisis should have been reasons to curb enthusiasm.
Eventually, it had to do just that: In mid-May, India hastily banned wheat exports to ensure its food security. It was a repetition of the failure of Covid when Modi bragged about how India, the pharmacy of the world, would save humanity. But a vicious outburst from the Delta version forced it to back down. As of March 31, India’s share in the global vaccine trade was just 2.3%. Like the pandemic, the wave of New Delhi’s wheat flip-flops is being felt internationally. The G-7 criticized the ban. “If everyone starts exporting restrictions or closing markets, it will only make the crisis worse,” German Agriculture Minister Kem Ozdemir said. In fact, the opposite may be true. From Indonesia’s ban on palm-oil shipments to Malaysia’s ban on chicken exports, some 30 countries have resorted to such measures. Had India not closed its markets, the country could have faced a shortage of chapatis—India’s ubiquitous, unleavened daily bread. People, rich or poor, use coarse wheat flour to make chapatis. And this year, it could be 6.5% less of these for the same crop as the previous one, while wheat production will see its first decline in seven years.
In short, the problem is this: Last year, about 770 grams of flour was found in one kilogram of Indian wheat. This year it may come down to 720 grams. The hottest march in 122 years has halted grain manufacturing. In fact, traders are buying wheat that is below their normal flour-yield cut-off level—which would score below 76 on the one-hectare test. According to industry sources, the inferior reading of 72 is now acceptable due to shortage of good wheat.
According to scientists at the World Weather Attribution Initiative, the fault can be assigned to a heat wave affecting India and Pakistan, which is at least 30 times more likely to be triggered by human-caused climate change. India’s harvest will be lucky to exceed 100 million tonnes this year, a steep drop from the initial government estimate of a record 111 million tonnes crop.
Of this total, exporting 15 million tonnes to the world – as claimed by the government – was short-sighted. On the one hand, the Food Corporation of India, the state’s procurement agency, neglected to fill its granaries. Last year it bought 43 million tonnes. This year’s target has been slashed to less than half. Those 19.5 million tonnes will go into procurement, as well as the 30 million tonnes currently in FCI storage, mostly public distribution; India has had a free meal program since the pandemic. The state’s wheat pool will have little left to rein in open market speculation.
The government is not without tools. If prices skyrocket, it could impose stock limits to force traders to give up their hoarders. FCI can also offload more rice than wheat into the subsidized public distribution system. Most Indian diets accommodate both. This could free up about 10 million tonnes of wheat thanks to government-to-government supply deals with Egypt.
Still, these are stopgap solutions. The basis of Modi’s failed agri-reform law was to give farmers more freedom to find a free market price for their produce. The face-off on Wheat shows that when it comes to agriculture, the dominance of markets remains a pipe dream. There has also been a limit on the export of sugar. Unlike wheat, where India is a minor player in global trade, the country is No. 2 in sugar shipments, followed by Brazil. This in itself is a hoax as the sweetener absorbs water – and India exports its rain by selling it abroad.
Maybe today’s wheat shortage will ease, as Lithuania has proposed, a protective corridor for grain shipments from Ukraine breaks the Russian blockade of the Black Sea. Due to this, the pressure of filling the stomach of the people of India can also arise. But the long-term threat of climate change will not go away. As global temperatures rise to 2°C or more above pre-industrial levels, the country’s chapati challenge will be only immediate.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia.