Against the grain: Is a wheat crisis looming for a food scarce Middle East?

As the world’s second-largest wheat-producing country, India had planned to export nearly 10 million tonnes of wheat to new customers in Europe, Asia and Africa in 2022-2023.

Offering to help all the countries facing a food crisis, India’s prime minister Narendra Modi said, “We already have enough food for our people but our farmers seem to have made arrangements to feed the world.”

But since Russia's invasion of Ukraine, food security has become a global concern as the two countries account for nearly 14% of global wheat production.

As a result, Kyiv’s ports have been blocked and many grain silos have been destroyed.

"When the world is facing an unprecedented food crisis due to the war in Ukraine, India’s sudden export ban of wheat to stem domestic inflation worsens global food insecurity"

With global wheat reserves depleted, countries that import their wheat started looking around for other sources.

For a while, India seemed like a viable option as its exports had grown considerably, with the country supplying a record 7 million metric tons of wheat (a 25% increase from average volume) in the previous year.

Unfortunately, a few weeks later, a record-breaking heatwave stunted India’s crops and New Delhi had to place a ban on exports for the sake of maintaining domestic food security as the country consumes most of the wheat it produces.

Usually, New Delhi has vast stocks of wheat but it gave free handouts to nearly 800 million people during the pandemic and at least 25 million tonnes of wheat are required for India’s own food welfare programme catering to 80 million people annually.

Commenting on this setback, Ashok Swain, a professor at the Uppsala University in Sweden, told The New Arab that “India’s decision to ban wheat export was particularly shocking as it came less than two weeks after India’s Prime Minister boasted to Berlin that if India was allowed by the trade regime, it could feed the world.”

Since New Delhi had assured food supply support to the world just days before, the ban sent shock waves through international markets.

India was criticised by members of the G7, an organisation of some of the world’s largest economies.

Oscar Tjakra, a senior grains and oilseeds analyst at Rabobank, told CNN Business that, “Indian wheat exports are especially important this year on the back of the Russia-Ukraine crisis,” and that New Delhi’s ban would “reduce the availability of global wheat exports in 2022.”

Assessing the global impact, Swain said, “When the world is facing an unprecedented food crisis due to the war in Ukraine, India’s sudden export ban of wheat to stem domestic inflation worsens global food insecurity. India is a major exporter of food grains, particularly wheat, to countries in the Middle East.”

Right now, the Gulf Cooperation Council (GCC) states are quite well-prepared, even though 85% of their food is imported and only 2% of their land is arable.

According to the Global Food Security Index, Qatar ranks highest among the Gulf Arab states at 24th place, with Kuwait, UAE, Oman and Bahrain following respectively and Saudi Arabia at 44th.

"Rich Gulf countries, particularly Saudi Arabia and UAE, will not be affected as they have been kept out of the ban. Even Oman received its wheat supply from India. The real impact will be on poorer and conflict-ridden countries like Yemen and Syria"

The Indian wheat export ban would not apply in cases where commitments were already given by private traders and to countries that would request supplies to “meet their food security needs.” Assured of sufficient wheat supplies by India, countries like the UAE and Saudi Arabia are safe as supply agreements were already in place, but this may not help in the long term.

However, there are some countries that would get affected in the Middle East.

As Swain has noted, “Rich Gulf countries, particularly Saudi Arabia and UAE, will not be affected as they have been kept out of the ban. Even Oman received its wheat supply from India. The real impact will be on poorer and conflict-ridden countries like Yemen and Syria. They do not have the political and economic resources to ensure that they get their share of wheat and other food grains; moreover, a large population, particularly in Yemen, depends on food aid.”

Already, economically constrained Lebanon and war-ravaged Yemen have been hit by food insecurity. Even if the GCC states do not face an immediate impact, it is unclear how long India can keep supply channels open to all Gulf markets.

For example, Egypt had been importing 80% of its wheat supplies from the Russia-Ukraine conflict zone and the scale of the impact would be higher due to the extent of the demand. Right now, Egypt is the biggest wheat importer in the world. Once supplies got discontinued, it turned to India to cover the gap, just days before the export ban by New Delhi.

For now, Cairo will get wheat due to existing contracts, but if the supply issues persist it can face issues in the days ahead as it needs large-scale supplies. Currently, Cairo is trying to receive wheat cargoes from Kyiv by rail from Poland instead.

Another aspect of India’s wheat ban is that it can drive global wheat rates much higher in the days ahead.

Wheat prices have spiked by 6% and flour prices have increased in the UAE which is the third-largest export market for India. Most GCC states can handle price hikes as they get a fiscal cushion provided by the current high oil prices, but if the market does not stabilize, the food grain could become out of reach for many poor consumers in Asia and Africa.

India's Soft Power

Nonetheless, this crisis may help India gain more influence in the Middle East. Unless the region finds other places to import from, it may well become dependent on New Delhi.

If the Ukraine-Russia war stretches on further, the extended wheat supply crisis could help increase India’s influence in the Middle East.

As Cullen. S. Hendrix, a senior researcher at the Peterson Institute for International Economics in Washington, writes, “Internationally, the ban’s significant caveats – exempting countries at its discretion and allowing exporters to meet existing commitments – position the Modi government to claim credit for helping partner countries weather the crisis and expand its influence in the Middle East.”

Just days after finalising wheat supplies from India, Wael Hamid, the Egyptian ambassador to New Delhi, stated that his country was “very much interested in building relations with India” indicating Egypt’s intention to become a regular customer since there is little chance of trade with Russia and Ukraine resuming any time soon.

Predicting worse days ahead, Professor Michael Tanchum, a senior fellow at the Austrian Institute for European and Security Policy and a non-resident fellow at the Middle East Institute in Washington D.C. told The New Arab that, “Without international coordination, export bans and trade restrictions could very well continue. The problems we are seeing now in food inflation and supply disruptions are merely a preview of what might be an even more severe crisis in Autumn 2022.”

According to the UN’s Food and Agriculture Organization, Russia and Ukraine controlled 30% of global wheat exports in 2021 and the ongoing conflict could keep global prices unstable until 2024.

Meanwhile, the UN’s World Food Programme reported in March that the amount of people on the edge of famine has risen to nearly 44 million from 27 million in 2019.

Sabena Siddiqui is a foreign affairs journalist, lawyer, and geopolitical analyst specialising in modern China, the Belt and Road Initiative, the Middle East and South Asia. 

Follow her on Twitter: @sabena_siddiqi