For the world’s vulnerable populations already reeling from one of the worst economic shocks and an unprecedented hunger and livelihoods crisis resulting from the Covid-19 lockdowns, Russia’s war in Ukraine poses an existential threat. In this two part series researcher Sajai Jose looks at the way food production across the globe is set to fall due to supply chain disruptions raising the spectre of mass hunger in poorer parts of the globe.

wheat

‘India’ may gain, but Indians should worry about the Ukraine war fallout

Even as the Indian government and grain exporters seek to reap a windfall from global wheat shortages, the lot of the average citizen – already in dire straits – is about to take a turn for the worse

                                                                   

From a narrow perspective, ‘India’ is being projected as a beneficiary of the steadily worsening food, fuel and resource crisis brought on by Russia’s war in Ukraine. Here is a sampling of media headlines to this effect from last week:

Must cash-in on big opportunity in wheat exports for India: Modi (Deccan Herald)

Why Ukraine crisis is an opportunity for India to become more attractive to investors (The Print)

Ukraine war gives Indian companies opportunity for acquisitions (Mint)

Indian grain traders are poised to capitalize on the country’s large wheat inventories (thanks to five consecutive bumper harvests) and surging international prices, and have already signed contracts to export a 5,00,000 tons of wheat. According to official figures, Indian wheat exports had increased ten times, from nearly two lakh metric tons (LMT) two years ago to 21 LMT in 2021, and the government is now aiming at 70 LMT of wheat exports in 2022.

During a discussion in the Rajya Sabha about India’s wheat exports in the context of the Russia-Ukraine war, Union Minister for Commerce and Industry, Piyush Goyal said that the Central government is continuously monitoring the opportunities that open up for India and India’s exporters. He said the Union Ministry of Agriculture has been coordinating with the Railways and the Shipping Ministry “to ensure seamless movement of agricultural products, particularly wheat, given the current situation.”

Speaking at a webinar with industry leaders, Modi himself dwelt on the wheat windfall for India.”The globe’s attraction towards India’s wheat has increased of late. Are our financial institutions, export-import department and shipping industry ready for this? Are they making comprehensive attempts to cash-in on the big opportunity that has arisen for India,” the Prime Minister asked.

According to food secretary Sudhanshu Pandey, the Union government has asked diplomatic missions abroad to facilitate outbound shipments of grains. Meanwhile, India’s two public sector oil majors, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd, have purchased 5 million barrels of Russian crude oil at heavy discounts of up to 20% in recent weeks.

COVID Response Watch LogoHowever, given the sharp spike in oil prices in the aftermath of the war, such gains do not translate into savings for the public. In fact, petrol and diesel prices have been increased six times in the course of seven days this month, while LPG cylinders will cost Rs 50 more. Needless to add, rising fuel costs will only put essentials further out of the reach of the common man.

India is also vulnerable when it comes to fertilizers; both in terms of direct imports of fertilizers, but also imported natural gas, an irreplaceable raw material in the production of fertiliser. As noted by the journalist Kaushal Shroff, we are dependent on imports for 25% of our urea requirements, 90% in case of phosphates (either as raw material or as finished fertilisers) and 100% in the case of potash. A third of India’s potash supply is sourced from Russia (which has now stopped exports), and its ally Belarus, which is now facing sanctions.

Shroff further explains the economic burden of rising natural gas prices for large importers like India. “According to a research note by SBI, for every one dollar of increase in the pooled gas rate, India’s fertiliser subsidy bill shoots up by Rs 4,000-5,000 crore.” And that’s just on account of fertilizer production alone. Analysts now expect regulated gas prices to at least double in immediate future, vastly increasing India’s fertilizer subsidy burden.

Here, it’s important to note that there has been a global crisis in fertilizers since 2020 due to lockdown-related disruptions, impacting Indian farmers. According to one report, “the shortage of DAP (the popular fertilizer Di-ammonium Phosphate) was most acutely felt in Rabi 2021… In many districts, rationing was imposed, and farmers were sold limited quantities of fertiliser. In the Lalitpur district of Uttar Pradesh, Bhogi Pal, a 55-year-old farmer, died standing in the queue to buy fertilisers…  The shortage of fertilisers led to widespread protests in October-November 2021 when the crisis became severe. In the Hansi district in Haryana, farmers went on an indefinite hunger strike. Such protests were also witnessed in Haryana, Punjab, Uttar Pradesh and Bihar.”

While fertiliser minister Mansukh Mandaviya has said that India needs about 30 million tons of fertilisers kharif (summer sown crop) season and “arrangements are in place,” he did not elaborate on this. Meanwhile, it has been reported that Indian Potash Ltd (IPL) has increased imports from Canada, Israel and Jordan to meet the shortfall, and that the Indian government is negotiating with Belarus, to buy a million tons of potash. As governments around the world scramble for shrinking fertilizer supplies, it’s not clear to what extent India will be able to replace fertilizer imports from Russia and Ukraine.

Track record of policy atrocities

During the Rajya Sabha discussion, Goyal informed the House that the Prime Minister has set a much more aggressive target for wheat exports this year, and quoted Modi as having said, “Take this opportunity so that we give such good quality wheat to the whole world that “woh swad hamare gehun kaa sabko itna (achcha) lag jaaye, ki uske baad (sirf) hamare desh ka hi gehun niryat ho” (so that the whole world remembers the taste of only India’s wheat and help increase our export of wheat).

The cynical observer may see this as the usual empty platitude the Prime Minister is fond of uttering periodically. However, given his government’s track record, Modi’s statement on wheat exports has ominous overtones for a nation struggling with the worst livelihoods and hunger crisis in the post-Independence era – a crisis almost entirely created by his government’s inept and callous policies.

After all, this is the same government that doubled oxygen exports in the peak of India’s Covid-19 crisis, when hundreds were battling for breath in hospitals across India for lack of oxygen, with state governments pleading with the Centre for additional supplies. Data from the Department of Commerce showed that India sold twice as much medical oxygen – 9,301 metric tons, earning Rs 8.9 crore – to the world during the first ten months of the fiscal year 2020-21 as compared to the previous financial year.

Similarly, data published by the Ministry of External Affairs showed that the government sent nearly 6.6 crore doses of Made-in-India vaccines to a total of 95 foreign entities under the banner of the Vaccine Maitri initiative, of which more than 5 crore doses were shipped as part of commercial deals and the United Nation’s COVAX facility and GAVI alliance. As noted by Angshuman Chowdhury of the Institute of Peace and Conflict Studies, Delhi, “so aggressive was India’s export programme that according to the government’s own submission before the Parliament made last month, more shots were sent out of the country than administered to Indians as of mid-March. Notably, by this time, the caseload had started to climb back up again, with India registering more than 23,000 cases on March 15.”

As noted by analyst Praveen Chakravarthy, the Modi government has collected fuel taxes to the tune of Rs 1 lakh on average from every Indian family over the last seven years, even as it made windfall gains made from low oil prices during this period. Yet, in the same period, poverty, hunger and malnutrition had only increased in the country. As Chakravarthy points out, this is the first time in the Modi government’s tenure that global crude oil prices have risen above $100 a barrel, and it remains to be seen how the government will deal with the crisis.

Just as atrocious has been the Modi government’s attitude towards food security. Last year, attempting to solve its ‘problem of plenty’ in food stocks following repeated bumper harvests, the Centre allocated about 78,000 tonnes of rice, procured at Rs 37 per kg by the Food Corporation of India (FCI) to distilleries for the production of ethanol at a subsidized rate of Rs 20 per kg. The Food Ministry also announced its intention to increase grain allocation to industry in coming years, and estimates that about 165 lakh tons of grains will be utilized to produce ethanol by 2025. As one analyst put it, the “decision to use good quality rice to manufacture ethanol is a bad policy for any time, but particularly unethical during a pandemic.”

Indeed, and as the recent Hunger Watch survey showed, poverty and hunger is only accelerating in India two years after the pandemic first hit the country, notwithstanding the government’s trumpeting of the success of its various food security schemes. The findings are unprecedented: 66% of the respondents reported income loss, while a shocking 79% of households reported some form of food insecurity.

Given this track record of the Modi government, Indians should be wary of reports celebrating India’s windfall in food exports, and of official pundits urging the government to take advantage of the international crisis while ushering in neo-liberal reforms in the food sector. That’s because historically, gains made by this government – not to speak of private players enabled by it – have not necessarily benefited the Indian public, and least of all, vulnerable groups.

India on the brink

The grim truth is that the ‘paradox’ of extreme poverty amidst plenty has been the norm in India, rather than the exception. Startlingly, the country that is the world’s largest producer of milk, pulses and millets and the second-largest producer of rice, wheat, sugarcane, groundnuts, vegetables and fruit, is also home to 40% of the world’s underweight people (more than 200 million people).

In an earlier article, this writer had outlined the many reasons – above all, the impact on food, fuel and fertilizer – that make the war in Ukraine unlike any other conflict in recent history. Even as the Indian government, sections of the media and private players celebrate the gains made by ‘India’ from this crisis, the fact is that fallout of the Ukraine war now threatens to tip the bucket over for most Indians, not just the Indian poor.

Sajai Jose is a researcher and journalist 

Read Part I


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