Feed home or the world? India’s wheat dilemma

The top importing countries for Indian wheat in 2020-21 included Bangladesh, Nepal and Sri Lanka. So, if restrictions are imposed on wheat exports, the most affected will be these neighbours

In September last year, when Prime Minister Narendra Modi met US President Joe Biden in Washington on the margins of the first in-person summit of the Quad group of countries, he had conveyed to him that India was ready to supply food grains to the world if the World Trade Organisation agrees.

Six months on, India's production of wheat has been hit by a severe heatwave that singed large swathes of the country in March and April this year and private traders look for export in view of the shortage of supply due to the Ukraine conflict.

Food stock, particularly wheat, in different parts of the world is dwindling due to the war in Ukraine. And India, though not among the top 10 wheat exporters of the world in the past, suddenly sensed an opportunity to export wheat to the rest of the world as the price of the crop goes up.

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

He let it be known that higher agricultural exports signify the ability of Indian farmers to meet the domestic requirement of the 1.35 billion population and yet produce a surplus to export to the rest of the world. He also assured that India will step up wheat supplies to countries hit by the Ukraine war and is likely to exceed wheat exports by over 10 million tonnes in the 2022-23 financial year.

According to data from the Directorate General of Commercial Intelligence and Statistics, the top 10 importing countries for Indian wheat in 2020-21 were Bangladesh, Nepal, Sri Lanka, the United Arab Emirates, Yemen, Afghanistan, Qatar, Indonesia, Oman, and Malaysia. These countries accounted for more than 99 per cent share of India's wheat exports in 2020-21, in both volume and value terms.

Traditionally, India has not been a large exporter of wheat to the global market, but the war in Ukraine and drought in some major growing countries have underlined the importance of India as one of the few remaining places with ample stockpiles. Major buyers, including Egypt, have recently approved the purchase of Indian wheat.

However, India now faces the prospect of a decline in wheat output. The government had set a wheat production target of 110 million tonnes for 2021-22, which is higher than the estimated production of 109.59 million tonnes.

State-owned Food Corporation of India procured an estimated 27 per cent less in the first 20 days of wheat procurement season this year, compared with the same period last year, leading to fears of increased prices of the foodgrain in the coming months. The government had recently lowered its wheat purchase estimates.

As on April 1, 2023, India would have stocks of 8 million tonnes of wheat, well above the minimum requirement of 7.5 million tonnes, an official statement said. India will have surplus wheat in the financial year of 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 on the lower procurement of wheat, Food Secretary Sudhanshu Pandey said that due to higher market prices, a large quantity of wheat was being bought 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 higher demand by the private players both for the domestic as well as export purposes this year, the purchase by the government agency is less."

But the early onset of the severe heat this year has damaged India's wheat crop. What has further complicated the matter is the rising food inflation, particularly that of wheat, and put the government in a dilemma whether to keep the domestic prices of wheat in check or allow exports to continue. Can both go hand in hand? 

If restrictions are imposed on wheat exports, the most affected will be India's South Asian neighbours like Bangladesh, Nepal and Sri Lanka. Food ministry officials, however, maintain India doesn't see a case for controlling wheat exports but cut the estimate for 2021-22 production.

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