India can still export 8-10 mn tons of wheat: NITI Aayog member Chand

The situation is not at all alarming on the procurement front, says expert in interview.

India’s wheat exports scenario has changed drastically in less than a month. From focus on touching a new record, the talk has not veered around curbing overseas shipments. NITI Aayog member Ramesh Chand discusses the issue with Sanjeeb Mukherjee.

Edited excerpts from an iterview.

What is your assessment of the wheat supply and demand scenario?

As per our assessment, wheat production in 2022-23 is expected to be around 6-10 million tonnes less than the second advance estimate of foodgrains production which in February 2022 had pegged wheat output at 111.32 million tonnes.

What is your assessment of procurement?

My understanding is that we normally require around 21 million tonnes of wheat in a year for NFSA. But, now that we have extended the free food grains scheme for another six months, we will require another 9-10 million tonnes. So the government will need 30-32 million tonnes to meet all its commitments.

On April 1, 2022 we had 19 million tonnes in stock. Even if this stock gets depleted by another 13-14 million tonnes and we manage to procure 20 million tonnes wheat, we should be in a comfortable position.

So you think procurement won’t be less than 20 million tonnes?

 I don’t think procurement will be much less than 20 million tonnes. We have already crossed over 13 million tonnes till Monday. To me the situation is not at all alarming on the procurement front.

Do you think there is a need to curb exports of wheat after factoring in developments like drop in production, slow procurement etc?

In my view, given the present scenario of production and procurement, India can afford to export 8-10 million tonnes of wheat even after factoring in a 10 million tonnes drop in production. Till then there is no fear. However, we should keep an eye on the emerging situation and take steps accordingly.

Just 15-20 days back India was so ‘gung-ho’ about wheat exports. Do you think the government miscalculated the emerging scenario and failed to anticipate what was happening?

Well, if you had asked me a month back, I was also hoping that India will be able to export at least 15 million tonnes of wheat. But, the effect of terminal heat was not known to anyone till then. One can understand temperatures rising 2-3 degrees above normal, but who would have expected that temperatures would rise by 6-7 degrees above normal in April. And, suppose we had not factored in the exports and the crop was normal. Prices would have crashed. So considering that production was initially estimated to be a record 111.34 million tonnes, talk of promoting exports was justified.

So what has gone wrong as far as wheat production is concerned?

Two things. First is terminal heat. Since the end of March, the temperatures have started rising in North India and in the first fortnight of April, temperatures in some places crossed even 40 degrees Celsius. Wheat is a crop which is highly susceptible to high temperatures. When temperatures start rising above 40 degrees Celsius it gets damaged significantly. So, when the grain was reaching maturity, the heat shot up which impacted its development. Wheat which has been sown early saw no impact.

But, wheat which has been sown late, around the fourth week of November or even later, has been badly affected and the grain is quite shriveled. Its (the grain) size has shrunk to like that of paddy. Another factor which has impacted output is that during the pollination stage that is around end of February, there was a prolonged spell of rains in North India this year. Which washed away the pollen. I myself saw in many fields the impact of these unusual weather events

But, prices have started rising for wheat and wheat products like Atta?

Prices would have risen even if production was normal because at some point domestic prices would have come in equilibrium with international rates. Even if a country does not allow exports, prices would have risen there as well because prices have their own ways to manifest. Also, if prices rise more than a tolerance, the government will surely intervene. But, to my mind it won’t happen

Do you think food prices will remain at an elevated level for long?

I feel post Covid-19 food prices are settling at a new equilibrium. Food Inflation started rising around May-June 2020, just when the Covid-19 was emerging across the globe. The Russia-Ukraine war only aggravated the same. So, food inflation was rising before the Russian war for two reasons, first is disruption in demand and supply and second is rising cost of production due to high diesel, fuel and most importantly fertilizer rates. My own take on the effect of the Russian war will be much less on wheat and sunflower oil but much more on fertilisers because the old USSR was a very big producer of urea and one of the largest producers of non-urea fertilizers in the world.