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India Isn’t Staring At Wheat Crisis: Experts
India has enough stocks to comfortably meet its domestic demands. However, authorities need to be alert and maintain the food reserves to avoid any consequences as far as the domestic demand is concerned, said experts
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India is not going to face wheat crisis amid the sharp price rise of 5-7 per cent as annual wholesale price-based inflation accelerated to a record 14.55 per cent in March, according to the experts.
Russia and Ukraine together account for almost a quarter of the total wheat supplies globally, however, war has resulted in a sharp shortage of wheat supply, leaving countries looking for alternative suppliers to fulfil their requirements.
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.
According to the experts, amid the reports of the wheat crisis, India has enough stocks to comfortably meet its domestic demands. However, authorities need to be alert and maintain the food reserves to avoid any consequences as far as the domestic demand is concerned.
"The Russian-Ukrainian conflict has created a void of 25 MMT in the global wheat export market, which has led to an increase in demand for wheat in international markets. India is expected to address 11 MMT, through established trade relations and channels. With bumper harvests in the last few years, India has enough wheat to address domestic requirements as well as fulfill incremental demand for export," said Taranjeet Singh Bhamra, Founder and CEO, AgNext.
Singh explained that buoyed by record-high demand and prices of wheat in global markets, Indian traders are aiming to commercialise on this wave. The Indian government is also making efforts to streamline supply chain infrastructure and aid Indian exporters to address this.
"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. For farmers, weaker production means reduced income and lower margins even as they deal with rising costs of fuel and fertiliser," said Amarnath Halember, Executive Director and CEO, NextG Apex India.
This year, yields are expected to drop by approximately 15 per cent due to the rising heat across the country. Wheat is a heat-sensitive crop and the high temperatures in March reduced the all-important grain-filling period leading to reduced crop weight and affecting the overall yield, said Halember.
"India isn’t staring at a wheat crisis, given that we are one of the largest producers of the crop. In fact, between 2020 and 2021, India produced a whopping 107.9 million tonnes of wheat. The country is now aggressively promoting wheat exports to multiple countries to bridge the demand-supply gap created by the war," said Amit Sinha, Co-founder, Unnati.
However, the current heatwave and the unfavourable climatic conditions during winter impacted wheat crops in major wheat-producing regions, likely to make them bear a 10-15 per cent loss in the overall yield. There may also be fertilizer availability issues to an extent. But these factors aren’t a cause for concern, Sinha said.
There are reports of lower yields of the crop being harvested across the country. Also, the ongoing heatwaves can impact the wheat harvest by making the grain shrivelled and comparatively smaller in size. This has led to a decrease in the harvest of 20 to 30 per cent in northern wheat-producing states. The food corporation of India (FCI) has procured 27 per cent less in the first 20 days of wheat procurement season compared with the same period last year.
"Farmers are directly selling their produce to private traders and exporters, to commercialize on the increased demand of private buyers due to escalated exports. This has enabled farmers to fetch higher prices than MSP, hence reducing government procurement numbers," said Bhamra.
Experts believe that wheat is not only an important component of the Indian economy, however, but the world is also reliant on export from the country too due to deficiency, especially in this time of international crisis like the ongoing war between Russia and Ukraine.
"Wheat procurement is at a critical low with the Food Corporation of India managing to procure 27 per cent less this year, in the initial 20 days of procurement season, as compared to last year. Increased private buying and the possibility of higher prices than the MSP may have led to this situation. We have to keep an eye on the situation before drawing any conclusions," said Halember.
India and international market amid crisis:
"Wheat production in India is expected to experience a slower growth rate, as compared to last few years, owing to lower yields from some states due to heatwave, however, the production is still expected to cross 100 MMT. Domestic demand is also on the rise due to the extension of the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) scheme, however, ample existing stocks will be able to cope with increased demand, both for domestic and export markets," said Bhamra.
What compounds the matter further is that this hike coincides with India’s endeavour to manage the ongoing inflation crisis in the wake of the war in Ukraine, which has already had a direct impact on the FMCG industry, especially. The rising price of wheat has a huge impact on the industry as it’s a key ingredient for several products, said Halember.
"India’s food production has steadily climbed in the past decade, with the country being bullish on the wheat cropping area, resulting in a massive surplus of wheat that can easily cater to domestic demand. In FY22, India exported over 7 million tonnes of wheat. The excess can help increase exports further, providing an opportunity for Indian farmers to earn more. The country is expected to record a harvest of 110 million tonnes this fiscal year," said Sinha.