Wednesday, May 25, 2022

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Wheat export ban further bolsters India’s surplus availability of grains

After much speculations going on for over a week or so, the Centre has finally put a curb on wheat export with immediate effect. In order to manage the overall food security of the country and to support the needs of the neighbouring countries, an amendment in the export policy of wheat has been done and Directorate General of Foreign Trade has issued a notification in this regard. The government has clearly stated that from now onwards, export will be allowed only on the basis of permission granted by the Government. In its notification, Directorate General of Foreign Trade has said that due to several factors, there is a sudden spike in the global prices of wheat, forcing us to take this decision.

In this scenario it is pertinent to look into- how secure India is when it comes to having availability of grains, especially wheat. As per the advance estimates of the government, India’s wheat output looks likely to go down in 2022, because of a sharp and sudden rise in temperatures in mid-March and April, causing damage to crop yields especially in Punjab, Haryana and Uttar Pradesh.

However, India- the world’s second largest producer of the grain has had five consecutive years of record harvests of wheat till 2021. Hence, India is in a much comfortable position, when it comes to having overall surplus availability of grains and stocks as they will be higher in any case than the minimum requirements for the next one year.

Department of Food and Public Distribution (DFPD), just a couple of days earlier, had 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. However, it did admit that wheat production is expected to be 1050 LMT, which is slightly lower than the initial estimate of 1110 LMT in FY 23 and year-end closing stocks are adequate after meeting all requirements.

As per the second advance estimates for 2021-22, total Food-grains production in the country is estimated at record 316.06 million tones, which is higher by 5.32 million tonnes than the production of food-grain during 2020-21. Further, the production during 2021-22 is higher by 25.35 million tonnes than the previous five years’ (2016-17 to 2020-21) average production of food-grains. Despite a possible fall in production, the production of wheat during 2021-22 may remain higher than the average wheat production of 103.88 million tonnes.

Department of Food and Public Distribution, responding to a question on lower procurement of wheat, had also said that due to higher market prices, large quantity of wheat is being bought by traders at a higher rate than MSP (Minimum Support Price), which is 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 as they are getting a good price for the wheat, said Sudhanshu Pandey, Secretary, Department of Food and Public Distribution.

Earlier the farmers had no option but to sell to the government. Now, they are selling only that quantity of their produce to the government, which they are unable to sell in the private market at higher prices. Therefore, from that perspective, the government procurement has reduced.

Total production of rice during 2021-22 is estimated at record 127.93 million tones, which is also higher by 11.49 million tonnes than the last five years’ average production of 116.44 million tonnes. Clearly, India has a surplus availability of rice as well. According to the government, the rice procurement last year was about 600 LMT and this year same figure is expected. Moreover, annual requirement for NFSA is roughly about 350 LMT. Clearly, the country is in a surplus situation.

For the same period, the production of Nutri /coarse cereals is estimated at 49.86 million tonnes, which is higher by 3.28 million tonnes than the average production. In the same vein, the total pulses production during 2021-22 is estimated at 26.96 million tones, which is higher by 3.14 million tonnes than the last five years’ average production of 23.82 million tonnes.

The total oilseeds production in the country during 2021-22 is estimated at record 37.15 million tones, which is higher by 1.20 million tonnes than the production of 35.95 million tonnes during 2020-21. Further, the production of oilseeds during 2021-22 is higher by 4.46 million tonnes than the average oilseeds production. The edible oil prices may also soften soon as the palm oil imports are expected to start very soon after a temporary ban by Indonesia.

Similarly, the total production of Sugarcane in the country during 2021-22 is estimated at 414.04 million tones, which is higher by 40.59 million tonnes than the average sugarcane production of 373.46 million tonnes.

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