Firm foothold

Aim to become a stable wheat supplier

The supply crunch-driven sharp spike in global wheat prices in the aftermath of the Russia-Ukraine conflict is being viewed as an opportunity for India to step up its wheat exports for the benefit of all stakeholders in this sector. While the government, whose grain coffers are brimming over, is hoping to downsize its inventories to save on the carrying cost of surplus stocks, the private sector is mopping up huge quantities of the freshly harvested grains in anticipation of lucrative exports. The farmers, as a consequence, are getting prices higher than the government-fixed floor rates. Substantial quantities of wheat are said to be sold outside the mandis, forcing the governments of some states, notably that of Punjab, to warn about penal action against those indulging in such transactions. The relatively low arrival of wheat in the regular markets and the perceptible shortfall in its procurement by the Food Corporation of India (FCI) bears this out. An unintended upshot of these developments is the realisation by the farmers and many of their unions of the logic behind enacting the three reforms-oriented marketing laws that had to be repealed after their protest at the Delhi borders.

Though the government’s preliminary estimate that this year’s wheat production would be around 111 million tonnes is now being questioned in view of the shrivelling of grains due to the early onset of summer, the wheat scientists think otherwise. They note that the impact of the so-called terminal heat would not be as large as is being made out to be. In any case, this phenomenon is confined only to Punjab, Haryana and some parts of Uttar Pradesh. The other major wheat producing areas, such as Madhya Pradesh and parts of Rajasthan and Gujarat, have escaped this damage. These areas, being closer to ports, are preferred by exporters to secure their supplies. Madhya Pradesh, which has become the second largest contributor of wheat to the FCI, could not play that role this year because of larger purchases by exporters. Elsewhere too, the wheat prices have tended to rule above the minimum support prices, resulting in lower official grain procurement.

It is indeed the abundant domestic availability of wheat that has prompted the government to publicly announce India’s ability and willingness to meet the shortfall in global grain supplies if the World Trade Organisation (WTO) allows it to do so. Finance Minister Nirmala Sitharaman, in fact, took up this matter with WTO officials during her visit to the US and has expressed hope of a positive response. It, therefore, seems fairly likely that India’s wheat exports in FY23 would be higher than last year’s record 7.5 million tonnes, though it is premature to hazard a precise guess about the final volume of shipments. The private trade is said to have already bagged export orders for more than 3.5 million tonnes and negotiations with Egypt, the world’s largest wheat importer, are still in progress.  However, the point to ponder really is that the Ukraine crisis-driven global grain shortage is not going to last forever. India should, therefore, utilise this opportunity to get a firm foothold in the international grain bazaar and project itself as a stable supplier of wheat. That would be in the long-term interest of the country, as also of its wheat producers and exporters.