Cloud over wheat exports as output dips, prices touch 10-year high
Wheat prices have risen to record levels, rising 6.95% on-year in April, which is a decadal high on the back of lower output and brisk buying by private traders at higher than government-ordained minimum support prices of ₹2015 a quintal (100 kg) in anticipation of robust export demand.
New Delhi: India’s estimated wheat output this year remains mired in confusion after a severe heatwave in mid-March cut yields of the main winter staple the country was hoping to export in large quantities to fill a global shortage due to the Ukraine war.
Some analysts HT spoke with warned of a potential tight domestic supply situation in a year of a global food crisis.
Wheat prices have risen to record levels, rising 6.95% on-year in April, which is a decadal high on the back of lower output and brisk buying by private traders at higher than government-ordained minimum support prices of ₹2015 a quintal (100 kg) in anticipation of robust export demand.
An emerging issue, according to analysts, is whether India can afford to export wheat without restrictions and if the country will witness a further spike in domestic food prices.
India exported a record 7.85 million tonnes in the fiscal year to March, up 275% from a year ago. A crimped output has now cast doubts over India’s wheat export potential.
According to the government’s revised estimates, wheat production is now expected to be 105 million tonne, 5.7% down from a record 111.32 million tonne forecast in February.
According to reports from farmers and traders, yield drops have been large in some states, ranging between 15-20%, and India could end up with an even smaller wheat crop of about 90-95 million tonne.
The government expects its own purchases of wheat to drop to a 15-year low of 19.5 million tonne, down from a targeted 44 million tonne.
According to official figures, the government needs 30.5 million tonne for subsidised food distribution to nearly 800 million Indians, other welfare schemes and the Pradhan Mantri Garib Kalyan Anna Yojana, the Covid-relief free food grain scheme in force till Sept 2022.
“With opening stocks of 19 million tonne, and expected procurement of 18 million tonne, the government will have 37.5 million tonne of wheat available for 2022-23,” said Ramandeep Singh Mann, an independent farm expert.
According to Mann, government food schemes will require about 31.4 million tonne. “This is more than what the government will be holding this year,” he said, adding: “Meeting this (government food schemes) will not be easy.”
This year will be a rare occasion when wheat procured by the government, estimated to be 18.5 million tonne, will be less than the opening balance stocks lying with the government, of about 19 million tonne.
April consumer food inflation figures, to be released on May 12, are expected to be on the upside. In fact, average monthly prices of nine of 22 food items tracked daily by the department of consumer affairs touched a record high in April.
“Nobody is sure about the actual size of wheat crop. Wheat output may be 90-95 million tonne. The government’s estimates are at best provisional at this stage,” said Rajinder Singh, a former agricultural extension officer from Haryana’s Karnal.
