While farmers can benefit from exports amid a bumper crop, food security activists urge caution
While farmers can benefit from exports amid a bumper crop, food security activists urge caution
Russia and Ukraine account for about 25% of world wheat exports. However, Russia’s invasion of Ukraine and subsequent Western sanctions against Moscow have drastically curtailed their wheat supplies. As a result, many countries that sourced wheat primarily from these two nations are now in dire need of alternatives.
India, the largest wheat producer after China, is reportedly looking at nothing. The government plans to allow increased exports to take advantage of higher wheat prices in the international market.
However, food security activists stress the need to prioritize local prices and ensure adequate supplies for domestic consumption before deciding on export volumes.
Minimum exports
While Russia and Ukraine exported 183 and 91 million tonnes (MT) of wheat between 2017 and 2021, respectively, India exported a tiny fraction of its production, or just 12.6 MT over that period. Five other countries accounted for the majority of wheat exports during this period, including the European Union (157 t), the US (125 t), Canada (112 t) and Australia (83 t).
India, which had the second highest supply of wheat (including production, existing stocks and imports) during this period at 613 million tons, exported only 2% of it, with about 80% used for domestic consumption and the rest being stored. In contrast, other leading exporters could sell large parts of their supply. For example, in the period 2017-2021, the US exported 31% of its supply of 404 tons. Canada exported 60.5% of its 186 MT, while Australia exported 57% of its supply of 146 MT.
Global Market
Many countries in Africa, West Asia and Southeast Asia rely heavily on Russian and Ukrainian wheat. Egypt, the largest importer of wheat, gets 93% of its needs from its eastern European neighbors. Indonesia, the second largest importer, is 30% dependent on these two nations. African nations such as Sudan (80% dependency), Tanzania (64%), Libya (53%), Tunisia (52%) and West Asian countries including Lebanon (77% dependency), Yemen (50%) and UAE (42%) are also heavily dependent on supplies from the two neighbors who are now at war.
India is now focusing on exporting wheat to many of these countries, said Dr. Madhaiyaan Angamuthu, Chairman of Apeda (Agricultural and Processed Food Products Export Development Authority). “Our focus markets are Egypt, Turkey, Nigeria, Algeria, the Middle East, Indonesia, Vietnam, Sri Lanka, Bangladesh, Thailand, the Philippines, Morocco and Tanzania,” he added.
“APEDA set up a working group to give impetus to the export promotion of wheat and to focus on the challenges and bottlenecks in production and export,” said Dr. angamuthu
With India’s wheat harvest season (March-May) coinciding with supply shortages, another bumper crop expected this year and a significant amount of buffer stocks in place, food security activists agree that India is well-equipped to step in and fill the gap . However, they warned that India should lose focus on domestic needs while exporting surplus wheat.
domestic needs
Ensuring price stability in India and the availability of grain for internal consumption should be a top priority for the Indian government while ensuring farmers are properly compensated, said Dipa Sinha, an assistant professor at the School of Liberal Studies at Ambedkar University in Delhi .
“Meeting the food security requirements for all Indians should be the government’s first priority,” said Dr. Sinha, who was involved in the Right to Food campaign. “This would require a continuation of the PDS [public distribution system]Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) and also expand the network to include more people who are currently excluded. This is also essential in view of further rising market prices. On the other hand, since higher prices are available, the government should consider buying wheat, which is needed for these food security requirements, from Indian farmers at a better price than the current MSP,” she added.
“The government should plan this move in a way that does not affect local consumption. A bumper crop of wheat is expected to allow the government to procure enough for its distribution and buffer needs. In addition, there are currently no export restrictions, so farmers can also take advantage of higher prices by selling the surplus to private traders for export,” said Dr. sinha
The controversial issue of exporting wheat from FCI stocks adds another dimension to this issue. A trade expert, who spoke on condition of anonymity, said if India decides to export wheat from its stocks, some developed nations could raise objections with the World Trade Organization. Back in March, India was accused of exporting rice from its stocks. India replied that its rice exports did not come from stocks held under public stockpiling programs.
Increase in agricultural income
Biraj Patnaik, former chief adviser to Indian Supreme Court commissioners in the Right to Food case, noted that the peace clause, adopted at the 2014 WTO ministerial meeting in Bali, does not prevent India from exporting grain.
“With buffer stocks in place, India should increase its wheat exports to stabilize global prices as much as possible,” Mr Patnaik said. “It is also important because the countries that depended on Russia and Ukraine for their wheat are looking for an alternative source. The government should seize this opportunity by sourcing all wheat grown at MSP, which would serve the interests of Indian farmers,” he added.
However, exports should not come at the expense of domestic consumption, especially given the recent expansion of the PMGKAY scheme, he warned.
