India bans wheat exports - is the price of bread going to rise even further?

An Indian farmer carries wheat crop harvested from a field near Jammu Credit: AP

Wheat prices have risen by 6% after India announced it is banning exports of wheat in order to protect its own food supply.

This latest spike means wheat prices have been driven up by 60% so far this year. The move by India has made an already shaky food supply damaged by the war in Ukraine worse - so could we see a shortage, and what does it mean for the UK?

Why have wheat prices increased so much?

The increase has been primarily been driven by the war in Ukraine.

Before the war, Russia and Ukraine accounted for almost a third of global wheat exports.

India is the world's second-largest producer of wheat, but they consume most of it internally and don't usually even reach the top 20 global exporters each year.

Russia and Ukraine aren't struggling to plant their wheat but getting it out of the country is a struggle. Credit: AP

Russia is the largest exporter with Ukraine in fifth.

After the war broke out, India stepped in and offered to export more wheat to help plug the hole in supply - and make a large profit from the soaring prices.

But on Friday India reversed course after they were rocked by surging inflation - mainly driven by rising food prices - like much of the rest of the globe.

The sudden shift has been partly driven by two months of heatwaves in India crippling wheat crops and causing internal wheat prices to rise by around 30% this year.

On Monday India said it would honour its commitments to export nearly 4.3 million tons of wheat until July.

India exported one million tons of wheat in April, by contrast, Ukraine exported 18 million tons of wheat in 2020.

An unexploded Russian rocket in a Ukrainian wheat field Credit: AP

The government also said they would continue supporting neighbouring countries like Bangladesh, Nepal and Sri Lanka.

But this means there will still be a deficit of wheat in the global supply.

Ukraine will likely produce only slightly less wheat than it does normally this year, but with all of its ports blockaded by Russia, it will struggle to get it out of their country.

The next crop will be even more difficult, with most of the wheat already in the ground by the time the harvest comes round many farmers (if they haven't fled or gone to fight) will struggle to find the labour necessary to get it out of the ground.

India's harvest has been impacted by record heatwaves Credit: AP

Earlier this month the UN's World Food Programme to called for the end of the blockade of Ukraine's ports to ensure global food security.

David Beasley, Executive Director of the World Food Programme said: “Right now, Ukraine’s grain silos are full. At the same time, 44 million people around the world are marching towards starvation.”Similarly, Russia is still producing massive quantities of wheat but with the heavy sanctions placed on its economy many western nations will refuse to buy it and other countries will likely be more cautious to be seen to be trading with Russia.

What does this mean for the UK?

In April, the Office for National Statistics said the price of bread had risen by 5.5% in the past 12 months with almost half of this increase (2.3%) coming in March 2022 alone.

This is still below the UK's inflation figure of 7%.

This was also generally low when compared to other types of food, with dairy products up around 10%, lamb up by 17% and margarine up by a massive 35%.

Margarine, along with other cooking fats and oils has been directly impacted by the war in Ukraine.

Ukraine and Russia are by far the world's largest producers of sunflower oil and exports of it have been dramatically affected by the war.

The price of bread has risen in the UK Credit: AP

The shortage has forced supermarkets to limit the sale of cooking fats in the UK.

It is unlikely supermarkets will be forced to do the same for wheat products, which are mainly bread and cereals.

The UK produced an estimated 14m tons of wheat last year and imported 2.3m - the highest import number in years.

This shows that even if there is a global wheat shortage the vast majority of wheat consumed in the UK is grown in the UK.

The ban on wheat imports in India will likely put further pressure on prices in the UK, but shortages at the moment look very unlikely.

What about the rest of the world?

The UK is in an extremely fortunate position with enough money to pay for high import prices and a large domestic supply of wheat, but many other nations aren't.

The Food and Agriculture Organisation of the UN said food prices rose by 12.6% in March alone and are now at record levels.

The price of wheat rose 17.1% in the same period.

The UN also said the war in Ukraine will likely have a direct impact on the food supply to Africa and parts of Asia.

The lack of wheat exports is expected to hit many African countries hard Credit: AP

They pointed out that Ethiopia, Kenya, Somalia, Sudan and South Sudan and Sudan all rely heavily on wheat imports from Russia and Ukraine.

Egypt, the world's largest importer of wheat, has been forced to set a price for the commodity after bread prices rose by 25% in March.

Iran has also struggled hugely from rising wheat prices with inflation currently around 40-50%.

The government was forced to cut subsidies for wheat in response to rising prices sending the price of some staples soaring by 300%.