Russia and Ukraine account for about 25% of the world's wheat exports. However, Russia's invasion of Ukraine and the subsequent Western sanctions against Moscow have curtailed their wheat supplies drastically. As a result, many countries which were sourcing wheat mainly from these two nations are now in dire need of alternatives.
India, the largest wheat producer after China, is reported to be eyeing the void. The government plans to allow increased exports to cash in on the higher price of wheat in the international market.
Food security campaigners however, emphasise the need to prioritise local prices and ensure adequate supplies for domestic consumption before deciding on the quantum of exports.
Minimal exports
While Russia and Ukraine exported 183 and 91 million tonnes (MT) of wheat, respectively, between 2017 and 2021, India exported a miniscule fraction of its output, or just 12.6 MT in the period. Five other countries accounted for the bulk of wheat exports in this period, including the European Union (157 MT), the U.S. (125 MT), Canada (112 MT) and Australia (83 MT).
India, which had the second-highest wheat supply (including production, existing stocks and imports) in this period — 613 million tonnes — exported only 2% of this, with about 80% used for domestic consumption, and the rest stored. In contrast, other leading exporters could sell big chunks of their supply. For instance, the U.S. exported 31% of its 404 MT of supply in the 2017-2021 period. 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 biggest importer of wheat, sources 93% of its needs from the East European neighbours. Indonesia, the second-largest importer, has a 30% dependency on these two nations. African nations such as Sudan (80% reliance), Tanzania (64%), Libya (53%), Tunisia (52%), and West Asian countries including Lebanon (77% dependency), Yemen (50%) and U.A.E. (42%) are also highly dependent on supplies from the two neighnours now at war.
India is now focussing on exporting wheat to many of these nations, said Apeda (Agricultural and Processed Food Products Export Development Authority) chairman Dr. Madhaiyaan Angamuthu. "Our focus markets are Egypt, Turkey, Nigeria, Algeria, Middle East, Indonesia, Vietnam, Sri Lanka, Bangladesh, Thailand, Philippines, Morocco and Tanzania," he added.
"To give impetus to the export promotion of wheat as well as to bring focus on the challenges and bottlenecks faced in production and export, APEDA has created a task group," Dr. Angamuthu said.
With India's wheat harvesting season (March to May) coinciding with the supply crunch, a bumper crop expected again this year, and a significant amount of buffer stocks, food security campaigners agree that India is well-poised to step in and fill the void. However, they cautioned that India should not lose focus on domestic needs while exporting surplus wheat.
Domestic needs
Ensuring the stability of prices in India and availability of grain for internal consumption should be of utmost priority to the Indian government while ensuring that farmers are adequately compensated, said Dipa Sinha, Assistant Professor at the School of Liberal Studies at Delhi's Ambedkar University.
"Meeting food security requirements for all Indians should be the first priority of the government,” said Dr. Sinha, who was involved with the Right to Food campaign. “This would require continuing with the PDS [public distribution system], Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) and also expanding the net to bring in more people who are currently excluded. This is also essential considering that the market prices are expected to increase further. On the other hand, with higher prices being available, the government should consider buying wheat required for these food security requirements from the Indian farmers at a better price than the current MSP," she added.
"The government should plan this move in such a way that it does not impact local consumption. A bumper crop of wheat is expected, so the government can procure enough for its distribution and buffer needs. Further, as of now, there are no export restrictions, so farmers can also get the advantage of higher prices by selling the surplus to private traders for exports," Dr. Sinha opined.
The contentious issue of exporting wheat from the FCI stocks adds another dimension to this issue. A trade expert, who spoke on the condition of anonymity, said that if India decides to export wheat from its stocks, some developed nations may raise objections at the World Trade Organisation. Already, in March, India was accused of exporting rice from its stocks. India had replied that its rice exports were not from stocks set aside under the public stock holding programmes.
Boosting farm revenue
Biraj Patnaik, former Principal Adviser to the Commissioners of the Indian Supreme Court in the Right to Food case, observed that the peace clause adopted in W.T.O.’s Bali Ministerial in 2014 does not prevent India from exporting food grains.
“With the buffer stocks at hand, India should increase its wheat exports in order to stabilise global prices to the extent that it can,” Mr. Patnaik said. “It is also important because the countries that were dependent on Russia and Ukraine for their wheat are looking for an alternate source. The government should use this opportunity by procuring all the wheat grown at M.S.P. which would serve the interests of Indian farmers," he added.
However, exports should not be done at the cost of domestic consumption, especially with the recent expansion of the PMGKAY program, he cautioned.
Published - April 02, 2022 07:42 pm IST
