India has banned private wheat exports to redirect Indian wheat shipments to nations which need it more, officials have argued. This comes in the backdrop of wheat production estimated for 2022-23 now falling to 105 million tonnes, from the earlier 113.5 million tonnes estimated, according to latest government estimates released on Saturday.
"There is no dramatic fall in production, and also no need to imagine a shortage," Commerce Secretary BVR Subrahmanyam told the press on Saturday at an inter-ministerial briefing. On the export control order, the government has decided to just 'redirect' exports to countries where wheat is required more, senior officials from the Commerce, Food and Agriculture Ministries said.
Late on May 13 the government banned all private wheat exports with immediate effect. The decision comes amid widespread loss of yield due to abnormal heatwaves in major wheat growing states such as Punjab, Haryana, Uttar Pradesh and Madhya Pradesh. As a rest, large parts of the crop had shrivelled.
However, the latest move by the government has kept an option open to export wheat as a tool of economic diplomacy. India will bilaterally permit the export of the grain to other nations on their request in order to counter the spiralling global food crisis which has seen a drop in wheat output.
Subrahmanyam said that India has received urgent requests by countries from across the world who are desperate for wheat after the Russian invasion of Ukraine stopped supplies from the two biggest wheat exporters globally. He argued that the government has decided to rationalize the global demand and ensure that all countries facing distress get optimal amount of Indian wheat. This is not possible when traders export wheat to the highest bidding nation.
India’s exports have historically been to its immediate neighbours in the subcontinent and the Gulf region, in some cases. Indian wheat has slowly begun to be exported to distant destinations such as Indonesia, the Philippines and South Korea in recent years due to changing trading patterns.
But it overwhelmingly still goes to just one country. In the April-February period of 2021-2022, Bangladesh bought almost 60 percent of India’s wheat allowed for imports in the current financial year, followed by Sri Lanka (8.1 percent), and the United Arab Emirates (7.3 percent).
Bilateral exports prioritized
While it is still not clear what the government's parameters for deciding how much Indian wheat each requesting nation gets, officials said the process will continue fully.
Case in point, the Commerce Ministry had on May 12 announced that it will send trade delegations to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria, and Lebanon to promote Indian wheat.
The move is part of the government's efforts to export 10 million tonnes of wheat in 2022-23, amid rising global demand, it said. Not more than 10 days after the Ukraine crisis began, the Centre began discussions with various countries, including Egypt, Turkey, China, Bosnia, Sudan, Nigeria and Iran on commencing wheat exports. Initial shipments have also begun to some of these nations.
Low procurement
Also, the public procurement of wheat by the Centre has been met with low response as farmers continued to sell to traders, at prices much above the Minimum Support Price offered by the government.
Officials had earlier told Moneycontrol that exports would soon be banned since the total public procurement in the current season had already been revised to a low of 19.5 million tonnes in the current 2022-23, down from 43.5 million tonnes in 2021-22. The government on Saturday said procurement of 18 million tonnes of grain has completed till 13 May. This includes 7.5 million tonnes of wheat containing shrivelled grains.
"After talking to states, we have reallocated some ratios of (public stockholding) grains. Allocation amount has not been changed, but the ratio of rice and wheat has been adjusted," Food Secretary Sudhanshu Pandey said. He said that food security would not be compromised as a result of lower procurement as states would still get the amount of grains earlier decided for them, but in a different ratio of grains.
Stressing that India's overall grain stockpiles are not expected to see a shortage, the government has said that 5.5 million tonnes of wheat has been replaced by rice in Pradhan Mantri Garib Kalyan Yojana (PMGKY), while 6.1 million tonnes of wheat has been replaced by rice under the National Food security Act (NFSA). The government has also suspended the open market sale scheme beginning immediately.
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