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Can India Step In to Cover The Food Lost in Ukraine?

Can India Step In to Cover The Food Lost in Ukraine?
Source: OWM

Following supply shocks and increasing prices caused by the crisis in Ukraine, Indian Prime Minister Narendra Modi told US President Joe Biden last week that India was ready to transport food to the rest of the globe.

Mr Modi said that India has “enough food” to feed its 1.4 billion people and that it is “ready to deliver food supplies to the globe from tomorrow” if the World Trade Organization (WTO) permits it.

Because of worldwide harvest concerns, commodity prices were already at a 10-year high before the crisis in Ukraine. According to the UN Food and Agricultural Organization (UNFAO) food-price index, they have risen dramatically during the conflict and are now at their highest level since 1990.

Russia and Ukraine are two of the world’s largest wheat exporters, accounting for almost a third of yearly wheat sales worldwide. In addition, the two nations account for 55 percent of worldwide annual sunflower oil exports and 17 percent of maize and barley exports. According to UNFAO, they are expecting to export 14 million tonnes of wheat and more than 16 million tonnes of maize this year.

“Due to supply problems and the prospect of an embargo, these exports must be eliminated from the equation. India should increase its exports, especially if it has sufficient wheat reserves “Upali Galketi Aratchilage, a UNFAO economist stationed in Rome, agrees.

India is the world’s second-largest producer of rice and wheat. It has 74 million tonnes of the two staples in store as of early April. 21 million tonnes have been set aside for its strategic reserve and the Public Distribution System (PDS), which provides low-cost food to over 700 million people.

India is also one of the cheapest global wheat and rice providers, with rice exports to roughly 150 nations and wheat exports to 68. In 2020-2021, it expects to export 7 million tonnes of wheat. According to authorities, traders have already inked contracts for the shipment of more than 3 million tonnes of wheat from April to July, in response to increased demand on the worldwide market. In 2021-22, farm exports reached a new high of $50 billion.

According to Ashok Gulati, a professor of agriculture at the Indian Council for Research on International Economic Relations, India has the ability to export 22 million tonnes of rice and 16 million tonnes of wheat this fiscal year. “It might be substantially greater if the WTO allows government equities to be exported. This would assist to lower global costs and relieve the strain on the world’s importing countries “he declares

However, there are some misgivings. “At this time, we have sufficient supplies. However, there are certain dangers, and we should not get overconfident in our ability to feed the globe “Harish Damodaran, a senior scholar at the Delhi-based Centre for Policy Research, agrees.

For starters, there are concerns about a lower-than-expected harvest. India’s new wheat season is underway, with officials predicting a harvest of a record 111 million tonnes, making it the country’s sixth consecutive bumper crop season.

Experts like Mr. Damodaran, on the other hand, remain skeptical. Due to fertiliser shortages and the vagaries of the weather – large rains and extreme early summer heat, he predicts the output will be substantially lower. “We’re grossly underestimating productivity,” he admits. “We’ll find out in another ten days.”

Another point of contention, according to experts, is the use of fertilisers, a necessary component of farming. After the war, India’s stockpiles of di-ammonium phosphate and fertilisers including nitrogen, phosphate, sulphur, and potash were depleted. Potash exports from Russia and Belarus account for 40% of global output. Fertiliser prices are already high over the world owing to rising gas prices.

Fertilizer shortages might wreak havoc on productivity in the coming crop season. According to Mr Damodaran, one way to get around this is for India to look into “wheat-for-fertilizer partnerships” with nations like Egypt and Africa.

In addition, if the war continues, India may confront logistical difficulties in increasing exports. “Exporting large quantities of cereals necessitates massive infrastructure, such as transportation, storage, and ships. Also, the ability to begin delivering in large quantities “Mr. Aratchilage expresses his opinion. There’s also the issue of increased freight expenses.

Finally, there’s the overarching concern about skyrocketing food costs at home, which reached a 16-month high of 7.68 percent in March. Price increases in edible oils, vegetables, grains, milk, meat, and fish have all contributed to this. The Reserve Bank of India has issued a warning about “elevated global pricing pressures in essential food categories,” resulting in “substantial uncertainty” regarding inflation.

According to the International Food Policy Research Institute (IFPRI), the Russian invasion is expected to have “severe ramifications” for global food security. According to the UNFAO, a sustained interruption in wheat, fertilizer, and other commodity exports from Russia and Ukraine may increase the number of undernourished people in the globe from eight to thirteen million.

Despite abundant harvests and food supplies, India’s government admits that more than three million children are undernourished. (The state of Gujarat, where Prime Minister Modi was born, has the third greatest number of such children.) “You can’t take food security lightly. You can’t mess with the food that’s been set aside for the subsidised food system “Mr. Damodaran explains.

If there’s one thing India’s leaders know, it’s that food – or the lack thereof – dictates their fate: in the past, increasing onion prices have brought state and federal administrations to their knees.