India Applies Stricter Restrictions On Agricultural Commodities

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News in brief:
To control domestic food prices and address inflation concerns, the Indian government has implemented measures such as banning onion exports and restrictions on sugar for ethanol production.
- While its interventions are negtively impacting global markets and driving up prices, they could be a way to secure votes ahead of next year’s election.

In an effort to control domestic food prices and address concerns over inflation, the Indian government has implemented a series of measures aimed at curbing the export or use of key agricultural commodities like sugar, onions, and wheat.

According to a news report, analysts see the timing for these interventions (coming ahead of next year’s general election) as a bid to secure votes for the ruling party within the country. However, the decisions have sent shockwaves through the global market.

India has prohibited the export of onions until March 2024 with reports of rising onion prices in neighboring Bangladesh, which heavily relies on Indian imports.

Also, the country has issued restrictions on sugar for ethanol production. The move is in line to boost domestic sugar supply. Indian government limited the use of sugar cane juice and syrup for ethanol production as it is expected to increase sugar output by 2.5 million tonnes, or roughly 10% of 2023’s projected production.

Also, the government has reduced wheat stockholding limits, with a view to preventing hoarding, while ensuring sufficient supply for domestic consumption.

However, as one of the world’s largest agricultural producers and exporters, India’s actions is significantly impacting the global food markets. Existing restrictions on rice, wheat, and sugar exports have already driven up global prices and disrupted supply chains for major importers. The price of sugar, is already at multi-year highs, a reports says, and has climbed further due to India’s export ban and lower production forecasts.

Analysts attribute the government’s interventions to concerns about inflation and its potential impact on the upcoming elections. Rising food prices pose a challenge for Prime Minister Narendra Modi’s government and could influence voter sentiment.

However, critics argue that these measures are counterproductive and ultimately harm India’s position in the global agricultural market. They claim that export bans are detrimental to long-term market competitiveness. They also observe that by restricting exports, India risks losing established customers to competitors like Brazil, potentially damaging its reputation and brand image.

Meantime, India’s current interventions are likely to remain in place until the elections in 2024. Experts anticipate continued volatility in agricultural commodity prices due to a combination of global factors like weather uncertainties and government policies.

Joseph Akahome
Joseph Akahome
Joseph O Akahome (OJ) is a writer, with a Bachelor of Arts degree in English and Literature from the University of Benin. He is an avid agriculturist, with a bias for poultry and an insatiable appetite for chicken wings. When he is neither reading nor researching, he likes to spend recreational time playing board games, or swimming in serene forested lakes.


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