Skip to main content Skip to footer

Global food shortage: Are US, IMF barking up the wrong tree?

June 16, 2022

By Bharat Hiteshi

India is being asked by the United States and the International Monetary Fund to reconsider its decision to suspend wheat exports. The data studied reveals that not India but the US itself is to be blamed for the impending food crisis.

Cereals are meant to be consumed by humans but the US government-funded ethanol industry uses an equivalent of 35 percent of the global world trade of cereals of 473 million tonnes. The Indian export ban set to prevent hunger will affect less than 2 percent of this amount.

The real culprit is use of food for animal feed as well as for other non-food uses, mainly agro-fuels. Ironically, India is being asked by the US government and the International Monetary Fund to reconsider its decision to suspend wheat exports. Their cited concern is that export restrictions will exacerbate food shortages amidst Russia’s invasion of Ukraine. But the argument does not stand ground technically or morally.
Santosh Kumar Sarangi, Director General, Foreign Trade, disclosed that “there is a sudden spike globally in the prices of wheat as a result of which the food security of India and neighbouring vulnerable countries is at risk. As a result, the government had made some amendments in its export policy.”

However, the government announced some relaxation to its order dated 13th May issued by Directorate General of Foreign Trade (DGFT), Department of Commerce, on restricting wheat exports. It has been decided that wherever wheat consignments have been handed over to Customs for examination and have been registered into their systems on or prior to May 13, such consignments would be allowed to be exported.

The government also allowed a wheat shipment headed for Egypt, which was already under loading at the Kandla port. This followed a request by the Egyptian government to permit the wheat cargo being loaded at the Kandla port. Meera International India, the company engaged for export of the wheat to Egypt, had also given a representation for completion of loading of 61,500 MT of wheat of which 44,340 MT of wheat had already been loaded and only 17,160 MT was left to be loaded. The government decided to permit the full consignment of 61,500 MT and allowed it to sail from Kandla to Egypt.

The government had earlier restricted wheat exports to manage the overall food security situation in India and to support the needs of neighbouring and vulnerable countries that are adversely affected by the sudden changes in the global market for wheat and are unable to access adequate wheat supplies. According to this order, this restriction would not apply in cases where prior commitments have been made by private trade through Letter of Credit as well as in situations where permission is granted by the Government of India to other countries to meet their food security needs and on the requests of their governments.

The order served three main purposes: ensure India’s food security and check inflation, it helps other countries facing food deficit, and it maintains India’s reliability as a supplier. The order also aimed to provide a clear direction to the wheat market to prevent hoarding of wheat supplies.

Interestingly Frederic Mousseau, Policy Director at The Oakland Institute, San Francisco, quoting a May 6, 2022 report by the United Nations Food and Agriculture Organization (FAO), observed that the world enjoys “a relatively comfortable supply level” of cereals. This is also confirmed by the World Bank which noted that global stocks of cereals are at historically high levels and that about three-quarters of Russian and Ukrainian wheat exports had already been delivered before the war started. All this means that actually there is no food shortage. These numbers are consistent with data from the Ukrainian Ministry of Agriculture that reported on May 19 that the country exported 46.51 million tons of cereals in the 2021/22 season, versus 40.85 million the previous year.