Located in Asia, India is the second largest wheat producer in the world. Making use of favorable weather conditions, the Asian nation harvests bulk wheat every year. Data highlight that India alone contributes around 14% to the total global wheat production. However, despite this, the country fails to rank among the top 10 wheat exporters of the world. Owing to high consumption needs, a major share of wheat produced is consumed domestically only and as a result, India contributes a meagre 3% in the global wheat trade.
However, the demand for Indian wheat shot up in the aftermath of the Russia-Ukraine war. Riding on the back of strong global demand, Indian wheat exporters exported record volumes of wheat to the world, which fueled up prices in the domestic markets and forced the Government of India to intervene in this regard. The GOI with a view to calming soaring prices and ensuring adequate supplies remain for domestic consumption banned the exports of wheat and wheat flour in May, while allowing the same through G2G deals for countries struggling with food security.
Approximately, a year later, the government’s stance remains the same and the GOI has brushed aside the speculations of lifting the ban on wheat and wheat flour exports, while hinting towards imposing a stockholding limit to avoid the possibility of hoarding.
Statements By The Sources
Talks with the sources have revealed that a high-level inter-ministerial committee is regularly monitoring the prices of essential commodities including wheat and the GOI is still firm on its resolve to keep the prices in check. Prices of cereals have witnessed a spike in the last few months and to avoid the possibility of a spike in domestic wheat prices, the Government of India, in no way intends to lift the ban on exports of wheat this year. The sources also cited that the Indian government is mulling over imposing stockholding limits to avoid hoarding and improve supplies of wheat.
Present Market Conditions
Inflation in wheat has been in double digits since June 2022. A look at the data reveals that retail wheat inflation surged by 19.91 percent in March 2023. Also, the prices of wheat in mandis are hovering at around 2,125 per quintal for the current season.
The only relief factor is, increased GOI’s wheat procurement this year. Sources have cited that GOI’s wheat procurement has exceeded 24 MT so far which is 40% higher YoY, signaling enough wheat for domestic consumption.
The Bottom Line
India is the second largest wheat producer in the world. However, the Asian nation doesn’t rank amongst the top 10 wheat exporters of the world, owing to high consumption needs. It however witnessed a surge in wheat exports in the aftermath of the Russia-Ukraine war which forced the GOI to impose a ban on exports of wheat and wheat flour. Almost, a year has passed since then and yet the GOI in no way, intends to lift the ban on wheat and wheat flour exports, fearing that such a move would stoke inflation and would raise domestic prices.
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