Export bans, restrictions: How government is trying to keep food prices in check ahead of elections

As India approaches the first phase of the upcoming general elections, the prices of essential food items are at the centre stage. In anticipation of the polls, the Indian government has taken measures to keep food prices low for consumers across the nation. At least five essential commodities are subject to various prohibitions, restrictions, mandatory disclosure provisions, or other measures ahead of the election season.

The first phase of the 2024 Lok Sabha elections is scheduled to begin on April 19, 2024.

Food inflation increased to 8.66 per cent in February from the previous month’s 8.3 per cent, whereas India’s retail inflation eased marginally to 5.09 per cent compared to 5.10 per cent in January.

However, Food and Agriculture Organization (FAO) of the United Nations’ food price index — a measure of the monthly change in international prices of a basket of food commodities — shows an ease in global prices, thus giving hope of a softening of food inflation in the near future. 

The index stood at 118.3 points in March 2024, marking a 7.7 per cent decline from a year ago. The index had fallen for seven consecutive months, from July 2023 until February 2024. It increased in March by 1.3 points (1.1 per cent) from its February level, driven by rises in the price indices for vegetable oils, dairy products and meat.

However, there was a decrease in the prices of sugar and cereals. The FAO Cereal Price Index averaged 110.8 points in March, down 3.0 points (2.6 per cent) from February and 27.7 points (20 per cent) below its March 2023 value.

Onion

The contentious issue of onion prices is once again at the forefront.

On March 22, 2024, the Government of India extended its ban on onion exports indefinitely, just days before the ban was set to expire on March 31. 

The export ban imposed on December 8, 2023 came in response to a domestic supply crunch, aimed at ensuring the availability of the staple vegetable to domestic consumers at affordable prices. Initially scheduled to continue until March 31, onion farmers and traders were hopeful that the ban would be lifted after this date. However, the decision to extend the ban came as a surprise to both groups.

Farmers in Maharashtra, the largest producing state, expressed that market conditions were conducive to lifting the ban. With the Rabi harvest expected to start arriving in the mandis soon, they argued that there was no immediate need for extending the ban again.

“The harvesting of Rabi onions has commenced and will continue through April. According to initial reports from farms, the crop looks promising. The next sowing is scheduled for August,” said Bharat Dighole, president of the Maharashtra State Onion Producers Farmers Association.

This indicates that there will be a good quantity of vegetables in the market. Historically, onions have been a critical commodity in Indian politics, with fluctuations in prices often influencing voter sentiment. However, the extension of the ban on onion exports has led to farmers voicing their frustration over mounting losses.

“So, it wasn’t the case that prices would have gone up significantly or that there would be a shortage in the market. That is why we were hopeful that the ban would be lifted after March 31. However, the government has made this decision with the elections in mind, aiming to suppress prices before voting,” Dighole said.

The extension of the ban has resulted in losses for onion farmers, with many unable to even cover the production costs.

Since December, following the export ban, prices have been declining. In Lasalgaon, Asia’s largest onion market, farmers are receiving anywhere between Rs 1,000 and Rs 1,300 per quintal.

“On the other hand, the production cost is around Rs 2,000 per quintal,” said Amol Madhukar Darekar, a farmer from Vinchur town in Nashik district.

Wheat 

The ban on wheat exports, in place since May 2022, persists. On March 29, 2024, the government mandated that all traders, retailers and processors across states and union territories declare their wheat stock position starting from April 1, with subsequent declarations required every Friday until further notice.

This, the government said, has been done to prevent hoarding and price spikes.

The decision came against the backdrop of central wheat stocks being at their lowest in 16 years. However, the government estimates a record 112 million metric tonnes (MT) of wheat output for the 2024-25 marketing season. Moreover, there is an expected rise in production in key states like Punjab, Haryana and Uttar Pradesh.

Down To Earth spoke to various wheat farmers in the states of Punjab and Haryana and all said they were expecting a bumper harvest this time.

Sugar

India, the world’s second-largest sugar exporter, placed sugar in a restricted category until October 31, 2022, when there were concerns about a shortage of sugar. The restriction was placed to ensure sufficient availability of sugar for domestic consumption at a reasonable price. However, the ban, initially extended on October 31, 2023, has been further prolonged indefinitely. 

The sugarcane crushing season is nearly complete and sugar production is expected to surpass the 30 million tonnes mark. According to the Indian Sugar and Bio-energy Manufacturers Association, the country’s sugar production may reach 34 million tonness in 2023-24, compared to a forecast of 33.05 million in January.

The domestic demand is around 27.5 million tonnes. 

Experts believe that the export ban is unlikely to be lifted, at least until the elections. Additionally, much of the surplus produced is expected to be diverted for ethanol production.

Rice

In July 2023, India banned the export of non-basmati white rice to prioritise domestic consumers amid depleting public stock in the central pool and concerns about a potential dip in rice production in the Kharif season 2023-24.

In January 2024, Union Minister for Commerce Piyush Goyal stated the government was not considering any proposal to lift export curbs on rice, wheat and sugar. However, it is aiding friendly nations such as Indonesia, Senegal, Gambia, Bhutan and more recently Maldives, among others, with their food security needs by permitting exports to these countries.

Pulses 

On April 10, the government mandated that pulses importers, millers, stockists, traders and processors disclose their stocks of all pulses from April 15 onwards to prevent hoarding, as it suspects a large quantity of imported legumes are stored in customs warehouses.

It instructed all states and union territories to enforce weekly stock disclosure of pulses by all stockholding entities and to verify the stocks declared by them.

“Stocks in warehouses located in major ports and in pulses industry hubs should be verified from time to time and strict action should be taken on stockholding entities found to be reporting false information on stock disclosure portal,” a statement released by the Union Ministry of Consumer Affairs, Food and Public Distribution, said. 

Apart from the five major pulses, namely, tur (pigeon peas), urad (black gram), chana (Bengal gram), masoor (lentils) and moong (green gram), states and Union territories have been asked to monitor the stock position regarding imported yellow peas, which are used in place of chana. Duty-free import of yellow peas has been permitted since December 8, 2023, until June 30, 2024, to enhance the overall availability of pulses. 

Nidhi Khare, Secretary of the Department of Consumer Affairs, emphasised the importance of ensuring that imported yellow peas are continuously released into the market.

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