Feed the house or the world? India’s wheat dilemma

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Workers unload wheat grains from a trailer at a wholesale grain market on the outskirts of Amritsar in India on April 16. Photo: AFP

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Workers unload wheat grains from a trailer at a wholesale grain market on the outskirts of Amritsar in India on April 16. Photo: AFP

The top Indian wheat importing countries in 2020-21 were Bangladesh, Nepal and Sri Lanka. Thus, if restrictions are imposed on wheat exports, the most affected will be those neighbors

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In September last year, when Prime Minister Narendra Modi met US President Joe Biden in Washington on the sidelines of the first in-person summit of the Quad group of countries, he told him that India stood ready to provide food grains in the world. if the World Trade Organization agrees.

Six months later, India’s wheat production was hit by a severe heatwave that scorched large swathes of the country in March and April this year and private traders are turning to export given the supply shortages due to the conflict in Ukraine.

Food stocks, especially of wheat, in different parts of the world are dwindling due to the war in Ukraine. And India, although it was not among the top 10 wheat exporters in the world in the past, suddenly sensed an opportunity to export wheat to the rest of the world as the price of the crop rose.

Commerce Minister Piyush Goyal said on April 3 that during the Covid-19 pandemic, India had become a major global supplier of essential food and agricultural products and that India had recorded the highest export of agricultural products. highest ever recorded during the 2021-22 financial year.

He said higher agricultural exports mean the ability of Indian farmers to meet the domestic needs of the population of 1.35 billion while producing a surplus to export to the rest of the world. He also assured that India will increase its wheat supplies to war-affected countries from Ukraine and is likely to exceed wheat exports by more than 10 million tonnes in the financial year 2022-23.

According to data from the Directorate General of Trade Intelligence and Statistics, the top 10 importing countries of Indian wheat in 2020-21 were Bangladesh, Nepal, Sri Lanka, United Arab Emirates, Yemen, Afghanistan, Qatar, Indonesia, Oman and Malaysia. . These countries accounted for over 99% of India’s wheat exports in 2020-21, both in volume and value.

Traditionally, India has not been a major exporter of wheat to the world market, but the war in Ukraine and the drought in some major producing countries have highlighted India’s importance as one of the few remaining places with large stocks. Major buyers, including Egypt, have recently approved the purchase of Indian wheat.

However, India now faces the prospect of lower wheat production. The government had set a wheat production target of 110 million tonnes for 2021-2022, which is higher than the estimated production of 109.59 million tonnes.

The state-owned Food Corporation of India bought about 27% less in the first 20 days of the wheat supply season this year, compared to the same period last year, raising fears of an increase in prices of food grains in the coming months. The government had recently lowered its wheat purchase estimates.

As of April 1, 2023, India is said to have stocks of 8 million tonnes of wheat, well above the required minimum of 7.5 million tonnes, according to an official statement. India will have a wheat surplus in FY 2023 even though production is expected to be 105 million tonnes, slightly lower than the initial estimate of 111 million tonnes.

Responding to a question about the decline in wheat purchases, Food Secretary Sudhanshu Pandey said that due to rising market prices, a large amount of wheat was being purchased by traders at a higher rate than the minimum support price, which he said was good for farmers.

“Due to an increase in market prices and increased demand from private players for both domestic and export this year, the purchase by the government agency is less.”

But the early onset of hot weather this year has damaged India’s wheat crop. Further complicating the matter is rising food inflation, particularly that of wheat, and has placed the government in a dilemma between controlling domestic wheat prices or allowing exports to continue. Can the two go together?

If restrictions are imposed on wheat exports, the most affected will be India’s South Asian neighbors such as Bangladesh, Nepal and Sri Lanka. Food ministry officials, however, maintain that India sees no point in controlling wheat exports, but cut the 2021-22 production estimate.

India would like to be seen as a reliable supplier of food grains to the world. But at the same time, the Modi government would not want its image to be tarnished by a possible shortage of wheat in the domestic market as the acute shortage of Covid-19 vaccines, triggered by exports to other countries, had done. in 2020 at the height of the crisis. pandemic.

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