Daily Management Review

India's Wheat Exports Are Booming, Benefiting The Country's Farmers


India's Wheat Exports Are Booming, Benefiting The Country's Farmers
Rajensingh Pawar, an Indian farmer, is selling his new wheat crop to private merchants rather than the state stockpiler for the first time in almost a decade, as a worldwide wheat price rally provides India's suppliers with a rare profitable export window, According to a report published by the news agency Reuters.
Following Russia's invasion of Ukraine, strong demand has resulted in growers receiving the best prices for their crops in history, while also reducing pressure on the state's grain procurement agency, which has racked up large debts as a buyer of last resort.
Pawar and his colleagues have harvested a record Indian wheat crop, giving growers a once-in-a-lifetime opportunity to sell the grain at near-all-time high global prices.
"After a long time, traders are ready to pay more than the MSP," Pawar, 55, said, referring to the minimum support price at which the Food Corporation of India (FCI) buys grain from farmers.
"India's rising wheat exports have helped farmers like us who are getting a far better return," he said, as he unloaded wheat at a grain market in Madhya Pradesh state, known for its top-quality wheat.
Prior to the almost 50% increase in global wheat prices, India struggled to export the crop due to annual increases in the MSP to please the politically powerful farm lobby, making Indian wheat more expensive than world prices.
However, due to a unique combination of high international price, repeated record crops, a weaker rupee vs the dollar, and improved internal logistics, shipments from India have become more tempting.
"This is a golden opportunity for India to export its surpluses," said Nitin Gupta, a vice president at food and agri-business Olam Agro India.
India's sales are contributing to the filling of a supply shortfall in worldwide wheat markets caused by Ukraine-related disruptions in the Black Sea region, crop cuts in Canada, and quality downgrades in Australia.
FCI's wheat imports are expected to drop drastically for the first time in decades due to strong demand from private grain handlers at rates above the MSP of 20,150 rupees ($262.88) per tonne.
State purchases that are lower result in significant budget savings. India spent 856 billion rupees ($11.2 billion) last year to buy a record 43.34 million tonnes of wheat from farmers, stockpiling state granaries and adding to the country's debt.
FCI purchases this year may fall below 30 million tonnes, according to trade and government officials, suggesting that less government money will be spent on purchasing and storing crops.
Wheat export arrangements have been finalised for between $330 and $335 per tonne free on board, according to Rajesh Paharia Jain, a New Delhi-based trader. This is about $50 per tonne less than rival suppliers, thanks to a jump in worldwide prices and enormous surplus supplies at home, making it easier for Indian suppliers to enter promo code, but it is still far higher than local rates.
Thanks to a flurry of export deals negotiated in February and March, India's wheat shipments set a new high of 7.85 million tonnes in the fiscal year to March, up 275 percent from the previous year.
Exports are expected to climb to 12 million tonnes in fiscal year 2022-23, making it a serious player in global markets, according to traders.
India's exports have also benefited from a rise in crop quality. Exporters have recently made sales to some of the world's most discerning wheat buyers, who were formerly limited to cost-sensitive areas that tolerated lower-quality wheat.
According to sources, Egypt, the world's largest wheat importer, has purchased the grain from India for the first time, boosting India's standing as a top tier supplier.
The widespread usage of higher-quality seeds has aided the quality enhancement. The top 10 wheat seed varieties accounted for more than 70 per cent of the roughly 31.5 million hectares sown with wheat last season, according to Gyanendra Pratap Singh, chief of the Indian Institute of Wheat and Barley Research.
"Earlier, India was not known for its quality wheat, but India's wheat is now as good as any high-quality wheat from other major global suppliers, and that's because of new seed varieties," Singh said.
Better seeds, combined with improved farm practises and more mechanisation, have transformed India's wheat market from predominantly low-quality feed wheat to one abounding in premium grades such as Durum, Lokwan, and Sharbati, which are used in pizza, pasta, and high-end bakery products.
"Newer varieties have helped farmers get higher yields with better protein content," said Amit Takkar, chief of brokerage Conifer Commodities.
"Indian wheat with 12% to 13% protein is pretty common now and that compares favourably with APW's (Australia Premium White) 11.5% to 12% protein."
Sudhanshu Pandey, the food ministry's senior official, thanked farmers and scientists for assisting India in becoming a new power in the wheat market, adding the government was committed to assisting India in becoming a regular exporter of high-quality wheat.
According to merchants, the one stumbling block to that upbeat outlook this year could be a drop in crop yields due to a sudden rise in temperatures in mid-March.
The government plans to produce a record 111.32 million tonnes of wheat this year, but that figure could be lowered if the recent hot spell saps stocks still leaking into wholesale grain markets.
Exports have ecstatic farmers in Madhya Pradesh's grains market.
"Prompt payments and higher prices for better grades of wheat are something of a rarity for us," farmer Narendra Pariyar said. "The wheat export boom has truly been a gold mine for farmers."