India can become a reliable grain exporter
Union Commerce and Food Minister Piyush Goyal’s optimism about India’s wheat exports scaling a new high in FY23 is well-founded, though his projection of the volume of likely shipments being around 10 million tonnes seems rather modest. Given the supply crunch, and consequential spike in wheat prices in the international market, in the context of the Russia-Ukraine war, exports might exceed that level by a handsome margin. In fact, the wheat shipments have already surpassed 7.5 million tonnes in 2021-22 and the trade circles, as also the Agricultural and Processed Food Products Export Development Authority, feel that these can be more than doubled in 2022-23.
Russia and Ukraine together normally account for 25-30 per cent of the wheat supplies in the global market. The void caused by their absence can be filled to a sizable extent by India, the only country that has ample surplus stocks. In fact, most wheat-importing countries, particularly those in Africa, West Asia, and Southeast Asia, which depend heavily on the Black Sea region for buying wheat, are now looking towards India to meet their requirements. Apart from the comfortable availability, India also enjoys the geographical advantage for supplying the grain to these countries. Some states, notably Madhya Pradesh, Uttar Pradesh, and Gujarat, are already making special efforts to boost exports. The Railways has assured them of full support to move the cargo to Kandla and other ports on priority.
For India, food exports are now a dire necessity rather than merely an opportunity-driven initiative. The country’s food grain output has consistently outpaced consumption despite liberal allocations of highly subsidised grains for the public distribution system and free supply to the select poor under the pandemic-related welfare programmes. The government’s grain coffers are brimming over even as another bumper wheat crop, estimated at a record 109 million tonnes, is currently being harvested. Consequently, the wheat inventories, estimated at about 20 million tonnes, are set to swell to more than 60 million tonnes by the end of the ongoing rabi-marketing season in May, further accentuating the grain glut.
This apart, there are other reasons that make it imperative for India to capitalise on its opportunities to become a regular and reliable grain exporter. Wheat prices in the international market are now ruling substantially higher than the domestic prices, allowing exporters to buy stocks from farmers at rates far above the minimum support price (MSP) and yet have a sufficient profit margin. Besides, there is little chance of any downturn in domestic wheat production as long as the government continues to follow the policy of open-ended grain procurement at the predetermined prices (read MSP). This policy has made wheat, as also rice, virtually the commercial crop with assured returns for the growers. Moreover, the private trade, which had been alienated from the grain market because of the government’s open-ended procurement, can be brought back by allowing them to buy grains at above MSP rates from the farmers or the mandis for export. This would help trim official grain stockholding to a manageable size to rein in the ever-burgeoning food subsidy. Any laxity on grabbing this export opportunity would mean missing the golden chance to create the much-needed export outlet for the surplus grains.