The Hindu Business Line : Wheat faces the heat

The size of the coming wheat harvest and whether the country will be forced to continue to import the cereal for the third year in a row have become matters of speculation, clear evidence of which was available at the recently-concluded International Wheat Seminar Vision 2020 in Bangalore. Not surprisingly, those closely monitoring crop conditions here are hoping the import door will open a little wider. No overseas supplier-country — including the world’s l argest exporter, the US — wants to be left out of this potentially lucrative business. On its part, the government is undecided about imports — and rightly so at this point in time as the crop size is yet to crystallise. Additionally, whether a steep hike in procurement price to Rs 10,000 a tonne will help meet the procurement target is unclear. There is also talk of the possibility of a bonus to wheat-growers, to ensure they deliver to the government first. The market, on its part, is looking for advance signals that would give a clue to price direction. One possible source of solace is that global wheat prices are expected to correct down to an extent in the second half of this year because of improved world production prospects.

If the current situation is full of possibilities and uncertainties in the short term, the outlook for the medium to long term is distinctly clear. The future is full of grave challenges. Quite apart from looming land constraints and water scarcity, Indian wheat is likely to be highly vulnerable to global warming. Already, the crop (along with maize/corn) is at the limit of heat tolerance. A temperature increase (2-3 degrees Celsius) during the crucial growing period is sure to hurt yields and, thereby, production. Farm research must, therefore, focus on evolving heat-tolerant or moisture stress-tolerant varieties. The challenges facing Indian agriculture, in general, and wheat, in particular, cannot be met by tinkering with policies relating to trade and prices.

The supply response to prices is rather limited as growers operate under daunting conditions. Higher prices do not automatically translate to higher production. On the other hand, high farm-gate rates mean food becomes unaffordable to the poor consumers, while others too end up paying high prices, given the intrinsic inefficiencies of the supply chain. Non-trade and non-price initiatives are needed to fight the adverse effects of creeping climate change. Strengthening the input delivery system, scientific water management, improved agronomy and investment in rural infrastructure are critical areas that cry for urgent attention. To the distinctly daunting production challenges, if you add the robust demand growth that is currently underway and is expected to continue into the foreseeable future, there is a potentially vulnerable food security scenario emerging. New Delhi should take cognisance of the situation, and initiate adaptation and mitigation measures before it gets out of hand.

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