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The Indian government is going all out to promote wheat exports, giving it priority over other shipments of even other grains, trade sources said.
Madhya Pradesh is leading among the States to encourage wheat exports, with its Chief Minister Shivraj Singh Chouhan announcing the waiver of a 1.5 per cent mandi tax on the grain meant for exports.
Egypt team visit
The Chouhan government has also ordered exempting wheat farmers from paying mandi tax until June-end.
These developments come on the heels of an Egyptian trade delegation’s current visit to India to buy wheat from India. Egypt, which imports 12 million tonnes of wheat annually, considers buying wheat from India.
Egypt’s Government Authority of Supplies and Commodities (GASC) is considering Indian wheat for public distribution. The delegation, which arrived on April 10, is scheduled to visit Punjab, Gujarat and Madhya Pradesh to get first-hand knowledge of the facilities available here before returning home on April 15.
Window of opportunity
On Tuesday, Reuters reported that Egypt’s Supply Ministry considered adding India to 16 other national import origins accepted by GASC. This is in view of the African nation trying to increase imports disrupted by the Russia-Ukraine conflict, which has opened up a window of opportunity for India to export other commodities such as maize and sugar to other countries.
“Indian Railways is trying to push up wheat for exports by adding more wagons. Ports are all busy exporting grains, mainly. Shipments of other grains, mainly rice, have been affected as a result,” said an exporter, not wishing to identify.
Wheat is now being shipped out from more ports, besides by road and barges like last fiscal when India exported a record of over 7.7 million tonnes (mt). The grain is now being exported from eastern ports such as Kakinada and Visakhapatnam, besides Kandla, Mundra and Nava Sheva.
‘Willing to supply food to world’
“Wheat from Bihar, Madhya Pradesh and Uttar Pradesh are being exported from Kakinada and Visakhapatnam ports,” said a Delhi-based exporter Rajesh Paharia Jain.
During his meeting with US President Joe Biden on Monday, Prime Minister Narendra Modi said India is ready to supply food to the global community if the World Trade Organization comes on board.
Apart from Egypt, many other countries, especially in Africa, South and South-East Asia, are looking up to India to fill the wheat supply void caused by the Russia-Ukraine war.
Some of these importing nations, such as Bangladesh and Egypt have also come forward to relax their norms to accommodate Indian wheat. On its part, India has improved its grading and cleaning of its wheat to facilitate more exports.
FCI procurement
On the other hand, the Centre is trying to ensure that the Food Corporation of India (FCI) has ample wheat stocks for distribution through the public distribution system (PDS) and to the targeted groups under various welfare measures. .
As of April 11, FCI had procured 2.05 mt of wheat since the procurement began on April 1. Of this, 7.86 lakh tonnes have been procured from Punjab, 7.68 lakh tonnes from Haryana and 4.95 lakh tonnes from Madhya Pradesh.
The procurement, out of total arrivals of 2.45 mt so far, is lower than 2.89 mt procured during the same time a year ago. “FCI is going strong all around to procure. Last year, it procured a record 43.34 mt of wheat. This year, it will happily settle for between 30 mt and 33 mt,” said Jain.
Lower carryover stocks
Pramod Kumar, Vice-President, Roller Flour Mills Federation of India, said procurement of wheat below 30 mt could pose problems. “We have had lower opening stocks this year. If FCI does not procure the required quantity, supply through various schemes could be affected,” he said.
This year, wheat stocks as of April 1 was 18.99 mt, a three-year low compared with 27.30 mt last year and 24.7 mt in 2020. But the stocks are well above the mandatory norms of 4.46 mt of operational stock and 3 mt of strategic reserve.
The Centre requires about 25 mt of wheat for distribution through ration shops and its welfare schemes. A welcome feature of this year’s wheat situation is that a record harvest of 111.32 mt has been forecast by the Ministry of Agriculture against 109.59 mt last year.
Competitively priced
Jain said, if FCI can procure another 30 mt, it could end up with a carryover stock of 10 mt next April and India could continue to play a pivot role in wheat, maize, sugar and rice exports.
“Punjab and Haryana are expected to contribute 18 mt to FCI stocks. We have to see which other States can chip in. Since open market prices are higher than the minimum support price of ₹2,015 a quintal, it could be a difficult task to procure wheat from other States,” Kumar said.
He, however, said exports would augur well for the farming community since Indian wheat is $50-75 a tonne competitive in the global market.
Wheat from other countries is priced above $400 a tonne with Argentine wheat being the lowest at $405 free-on-board. On the Chicago Board of Trade, benchmark wheat futures are currently ruling at $10.96 a bushel ($402.67). Wheat prices have gained about 30 per cent since the Ukraine war began on February 24.
Punjab, Haryana
A trader said wheat from Rajasthan and Uttar Pradesh is usually sold in Punjab’s agricultural markets. But given the higher open market prices, it may not be available this year.
Jain said, Haryana is trying to procure as much wheat as possible for the FCI, while Punjab would also chip in by offering at least 13 mt. “Farmers will prefer giving the wheat to FCI at MSP in total, rather than sell a part of their produce to exporters,” he said.
The exporter said FCI procures wheat without any restrictions, whereas exporters may buy as per their needs. Thus, the farmers could be left with a good part of their produce. They would want to avoid such a situation and may prefer FCI to sell their produce.
“Punjab levies 8.5 per cent mandi fees and Haryana 6.5 per cent. This is why exporters prefer other States,” said Kumar.
Current prices
It is one of the reasons why wheat prices are lower in both these States compared to Madhya Pradesh, Gujarat, and Rajasthan. Wheat prices are currently at par with the MSP in Punjab and Haryana. In Gujarat, the modal price or rate at which most trades takes place is over ₹2,200 a quintal. The modal price in Madhya Pradesh is over ₹2,100 and over ₹2,050 in Rajasthan.
At least 1.25 mt of wheat has been exported from March 1 to April 12. The Food Ministry said last week that at least 3.5 mt of wheat have been contracted for exports until July.
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