Inflation Impact: India Halts Export Of Wheat To Avoid Crisis

As the prices of commodities in India soar in the entire country, India has put wheat export under the “prohibited” category, according to the reports. 

According to a notification, Prime Minister Narendra Modi led the central government take the step to manage overall food security in India and support neighbouring and vulnerable countries.

However, exports will be permitted on the basis of permission granted to other countries to fulfill their food security requirements and based on the request of their government. 

Last month, Commerce and Industry Minister Piyush Goyal said that Egypt, which is one of the largest importers of wheat from Ukraine and Russia, has approved India as a wheat supplier.

In the country, the prices of wheat and atta have increased sharply as India has hiked exports of the cereal following a nearly 40 per cent rally in global rates amid the ongoing war between Russia and Ukraine.

In 2022, the wheat production is at 95 million tonnes (mt) by traders, against centre estimates of 105 mt. Talking the minimum support price (MSP) for wheat procurement, it stands at Rs 2,015 per quintal. 

Also, retail inflation in wheat and atta increased to 9.59 per cent in April and wheat procurement by the government has decreased by approximately 55 per cent as open market prices are higher than MSP.

With disturbance in the Black Sea region due to the war that resulted in the supply chain disruptions, India has tried to fill the vacuum. There are several people who are raising concerns about a possible wheat crisis in India.

However, experts told BW Businessworld that India is not going to face a wheat crisis. Experts mentioned that the existing buffer stocks for wheat were at 2.5 times the buffer norms, in 2021-22. Therefore, a hike in demand due to export is not going to squeeze the availability of wheat for domestic supplies. 

Apart from that the expected wheat procurement during this Rabi season is also estimated to be 100 MMT.

India is also witnessing the worst heat waves and hundreds of acres of wheat crops were destroyed resulting in yields potentially declining by as much as 50 per cent in some parts.

“India may not be staring at a wheat crisis just yet but given the heat-wave conditions we are grappling with now, it does bring about a real fear of reduced yields, as it has been the case for a couple of years,” said Amarnath Halember, Executive Director and CEO, NextG Apex India told BW earlier.

For farmers, weaker production means reduced income and lower margins even as they deal with rising costs of fuel and fertiliser, said Halember. 

Meanwhile, the secretary of the department of food and public distribution (DFPD), Sudhanshu Pandey said that India has a comfortable food situation with an overall surplus availability of grains and stocks expected to be higher than the minimum requirement for the next year. 

Addressing a press conference, Pandey said that after meeting the requirement of welfare schemes in the year ahead, on April 1, 2023, India would have stocks of 80 LMT of wheat, well above the minimum requirement of 75 LMT. 

He said that India would have surplus wheat even though production was expected to be 1050 LMT, slightly lower than the initial estimate of 1110 LMT in FY 23.

Responding to a question on lower procurement of wheat, Pandey said that due to higher market prices, large quantities of wheat were being bought by traders at a higher rate than the minimum support price (MSP), which was good for the farmers. 

“This year due to an increase in market prices and higher demand by the private players both for the domestic as well as export purposes, the purchase by the government agency is less. But that goes in favour of the farmers. Farmers are getting a good price for the wheat,” Pandey said.

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