Heatwave hits wheat output, govt says no curbs on export

NEW DELHI: After five straight years of record harvests, India’s wheat output is estimated to decline by at least 5% this year due to a severe heatwave, but the country will still have surplus stocks amid a pressing global food shortage due to the Ukraine war, a senior official said Wednesday.

India aims to fill a large gap in global wheat supplies due to the Black Sea conflict, as it is one of the few countries to currently hold surplus stocks. While the world’s second-largest grower was anticipating another bumper crop, dry and hot weather in mid-March cut yields in several foodbowl states.

Yet, the government is not planning to put any restrictions on wheat exports, as is being speculated in some quarters. “I don’t see any controls on exports,” said food secretary Sudhanshu Pandey. India has finalised contracts to export nearly 10 million tonne of wheat so far since the war cut supplies.

The government’s total wheat purchases from ongoing harvests and previous stockpiles will be approximately 38.5 million tonne, which is in excess of requirements needed for various subsidized food programmes, Pandey said.

Extreme weather coupled with brisk buying of wheat by private traders in anticipation of strong export demand have upended the government’s initial calculations of output and procurement.

According to the agriculture ministry’s revised estimates, total wheat production is now expected to be 105 million tonne, down from 111 million tonne forecast in February.

The government has cut its wheat procurement target sharply, from about 44 million tonne to about 19.5 million tonne, mainly because farmers are preferring to sell to private traders, who are paying higher prices than the government on the back of a global wheat shortage.

Procurement refers to the government’s buying of rice and wheat at federally-fixed minimum support prices (MSPs) for distribution of subsidized food to nearly 800 million food-insecure Indians as mandated by the National Food Security Act. Besides, the government also maintains emergency reserves.

The government needs approximately 25 million tonnes of foodgrains annually to meet requirements under various food programmes. It also needs another 10 million tonne for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), the Covid-relief scheme which provides 5kg of additional grains per person per month. The scheme will run till September 2022.

To make up for lower procurement of wheat, the government will add 5.5 million tonne of rice from its stockpile to the free-food scheme, PMGKAY.

“We will still be in a surplus position. This year, due to increased market price and high demand from private players, purchases (of wheat) by the government will be less. That goes in favour of farmers because they are getting a good price. Earlier farmers had no option but to sell to the government,” Pandey said.

The MSP for wheat is about ₹2,015 a quintal (100kgs), while private traders are paying between ₹300-400 more this year due to export demand, according to market data.

Russia’s invasion of Ukraine has severely dented wheat supplies. The two countries account for nearly 29% of global wheat export, besides several other farm and non-farm commodities.

“A 5 or 6 million tonne shortfall in wheat output will not make much of a difference in terms of domestic food security but it will push up domestic wheat prices and limit exports,” said Ashok Agrawal, an analyst with Comtrade.