Dividends and India bans wheat exports as domestic prices soar

With the calendar changes to June, people are thinking about summer and one aspect of summer is warmer temperatures. Most of like them, but in the world some countries are beginning to experience higher than normal or extreme temperatures. In depends how long it lasts because if it is too long the crops which are expected to grow in more tempered temperatures will and do wilt and die. If that happens crops will and do fail or the yields will be very low even if the rains come. If the rains do come, because the crops have failed, soil erosion will be a cause of concern.

In an article by Rajendra Jadhav, Mayank Bhardwaj, and Nigam Prusty of the Associated Press, due to the long period of extreme heat in India, the government has stopped exports of wheat. The reason why it is important is after the Ukraine (think war with Russia – no planting) India was the second largest exporter of wheat. India was expecting to export 10 million tonnes this year. Due to the long heatwave, prices of bread and prices counting to inflation has increased.

If you consider not exporting means a loss to the Treasury of India and for many growers their business plan is to export wheat, it is a big loss. It does not happen very often sometimes not at all if you consider the potatoe famine in Ireland, wheat and other crops were being exported at the same time. It is normal to maintain exports.

Wheat prices in India have soared due to the long heatwave from what the government of India supports the farmers 20,150 rupees to over 25,000 rupees ($320) a tonne. The government of India similar to other governments around the world ensure supports for both the farmers to make enough to plant again the next year and the consumers who need bread to survive. The government of India made a political decision to ban exports.

Linking to dividend paying stocks, with climate change or extreme weather, governments will make political decisions to stay in power. There will always be a side which says they could do both – cap prices and export, but governments make decisions in their best interests. For the company, they have to have the ability to adjust and this is why how the company deals with crisis is a very good thing to know.

There are more questions than answers, till the next time – to raising questions.

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