The story so far: On May 13, the government effectively banned the export of wheat.
What happened?
On March 25, to a supplementary question raised by Congress leader Anand Sharma in the Rajya Sabha regarding improving wheat exports, given that Russia and Ukraine the two large exporters of the commodity were in the middle of a war, Commerce and Industry Minister Piyush Goyal answered that Prime Minister Narendra Modi wants the flavour of India’s wheat to capture the entire world’s taste buds.
The Minister said that “we are working on the track of increasing our wheat exports to the current importers. Agriculture Ministry is in dialogue with various countries for the process to be speeded up and expedited so that newer markets for wheat can be sought.”
The efforts to increase wheat exports continued even as recently as May 12 when the Centre decided to send trade delegations to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon to “explore possibilities of boosting wheat exports,” a PIB press release said.
However, food security campaigners had insisted on a cautious approach from the start.
Their reasons were two-fold. They argued that ensuring the stability of prices in India and the availability of grain for internal consumption should be the top two priorities for the Indian government than increasing exports. The increase in exports should not be done at the cost of domestic consumption, especially with the recent expansion of the Pradhan Mantri Garib Kalyan Anna Yojana(PMGKAY) program, they cautioned.
Why were wheat exports banned?
Eventually, the food security experts’ warnings came true.
On May 4, the government revised down its wheat production estimates from 111.32 million tonnes (MT) to 105 MT for the crop year ending June. According to the Press Trust of India, 18 MT of wheat were procured till May 14 of the ongoing 2022-23 marketing year, much less than the 36.7 MT in the year-ago period.
The graph below depicts the cumulative amount of wheat procured in the current and previous marketing seasons. The gap in procurement levels has been widening consistently.
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So, the decrease in production estimates and a considerable fall in wheat procurement raised concerns that domestic consumption may get impacted. Moreover, the local prices started to rise. In March, the wholesale inflation of wheat crossed the 14% mark, though it eased a bit to about 10% in April.
In April, retail inflation of wheat flour accelerated to 9.59% from an already higher 7.77% in March. As of May 17, the average retail price of wheat flour was ₹33.05 per kg. The maximum price had touched ₹59/kg.
The graph depicts the retail inflation of wheat flour, which has accelerated to 9.59% in April 2022, the highest since at least 2015.
Both these factors forced the government to ban wheat exports on May 13, two days after the decision to send delegates to nine countries to explore the option of enhancing exports was taken. The Centre relaxed its export ban order on Tuesday by allowing consignments that were registered in the Customs Department’s systems and handed over for examination on or prior to May 13. They have also allowed a consignment headed for Egypt.
THE GIST
As Russia and Ukraine, the largest exporters of wheat were at war, India has been looking forward to fill this gap by boosting its own exports.
However, food security campaigners insisted on a cautious approach. They argued that ensuring the stability of prices and the availability of grain for internal consumption should be the top two priorities than increasing exports.
The extreme temperatures recorded in March and April, across North India, were the reason behind the sudden turnaround of the government, forcing them to ban wheat exports.
What led to the decrease in production?
The extreme temperatures recorded in March and April, across north India, were the reason behind the sudden turnaround of the government.
For instance, across Punjab, between April 8 and 14, the maximum temperature was over 6°C higher than the usual, compared to the long period average. The actual maximum temperatures have been consistently hovering over the 40°C mark across the State in April. The extreme heat led to a marked decrease in wheat yields across north India. For instance, in Punjab, crop cutting experiments showed that the wheat productivity was below 18 quintals per acre this year, down from the average yield of 19.7 quintals per acre last year.
Hence, the wheat arrivals in Punjab’s mandis were 20% lower in the first twenty days of the 2022 season compared to the same period in 2021. In the first twenty days, 73 lakh metric tonnes of wheat had reached the mandis in 2022, compared to the 92.4 lakh recorded in 2021.
