Import duty waiver may hurt wheat farmers

Waiving the wheat import duty is likely to affect farmers during the rabi sowing season.

Since speculation surfaced about the duty waiver two weeks ago, the price of wheat in international markets has jumped by more than 13%to $210 a tonne. Despite this, the cost of imported wheat in ports in south India is Rs 200-250 a tonne less than prevailing local prices.

From Rs 1,600 a quintal at the beginning of the previous rabi season, wheat prices have risen to Rs 2,100-2,150 now in the northern states. The government lowered the wheat import duty from 25%to 10%in September and waived it earlier this week.

“Farmers will be discouraged from bringing additional area under wheat this year due to the possibility of a price fall. Bulk consumers in south India will prefer importing wheat,” said Veena Sharma, secretary of the Roller Flour Millers’ Federation of India.

India’s wheat imports are estimated at 2.5 million tonnes this year, of which 1.5 million tonnes have already landed. The area under wheat has increased by over 14%in this rabi season. The agriculture ministry estimates the wheat acreage on December 2 at 17.39 million hectares, up from 15.25 million hectares a year ago.

“With imported wheat being cheaper, traders will bring in huge quantities. Some farmers might shift to oilseeds and cash crops,” said a wheat trader in Amritsar. Experts said France was the only source for import of quality wheat because Ukrainian wheat did not meet India’s standards for direct consumption. The wheat harvest in Australia is scheduled in mid-January, slightly before the Indian harvest.  

“India needs wheat till its harvest begins in mid-February. So, the government’s decision is welcome,” said Rajiv Tevtiya, managing director and chief executive officer, RML AgTech.