Can the Ukrainian crisis make India a key wheat exporter?

Although wheat exports may increase due to supply disruptions caused by the Ukrainian conflict, there has been a general increase in agricultural exports in recent years. In rice, for example, India has been the leading exporter for several years now. On the other hand, it is the second largest producer of wheat, but until recently was only the 34th largest exporter.

India’s export basket has added another item to the list of goods finding buyers abroad. And it’s wheat. With the collapse of supply chains from Ukraine and Russia, many countries used to importing from these countries are now looking for new sources of this essential food grain. India, the world’s second largest wheat producer, could end up filling the void left by the other two countries. The latest news that Turkey has placed an order for 50,000 tons of wheat from India follows the conclusion of contracts with Egypt. In other words, West Asia is now looking to meet its grain needs from India.

The Agricultural and Processed Food Products Export Development Authority (APEDA) has sent a delegation to Turkey to finalize the deal which is being implemented through a private electronic mandi. The Food Ministry says several countries are interested in buying wheat from here, including Indonesia, Israel, Oman, Nigeria and South Africa. The only downside to increased exports is that domestic prices suddenly rose, alarming both consumers and the milling industry.

The renewed interest in exports also came at a time when wheat production estimates were revised down due to the sudden rise in temperatures in mid-March. Production is now expected to be 105 million tonnes against an earlier projection of 115 million tonnes.

Despite this downward revision, there remains hope that India will finally emerge as a major player in the global wheat trade. Although it has always been one of the largest producers of food grains, it has not been able to carve out a place as a major wheat exporter until now. The situation had already started to change in the last financial year – 2020-21 – when wheat exports increased from 2 million tons the previous year to more than 7 million tons. For the current fiscal year, it is expected to touch 11 to 12 million tons.

Although wheat exports may increase due to supply disruptions caused by the Ukrainian conflict, there has been a general increase in agricultural exports in recent years. In rice, for example, India has been the leading exporter for several years now. On the other hand, it is the second producer of wheat, but until recently, it was only the 34th exporter. This scenario looks set to change, but much will depend on its ability to secure a sustained supply of wheat to world markets. With rising domestic prices, the country’s millers have already expressed concern over increased exports.

India is also the fourth largest exporter of cotton and seafood. But it has yet to create a market for exports of other agricultural products, despite being one of the world’s largest producers. One of the problems encountered by the increase in exports of agricultural, horticultural and marine products is that of technical specifications which have become major non-tariff barriers in several developed countries. It is here that scientific expertise must be provided to exporters to help them overcome these obstacles. For example, mango exports to the United States have long been blocked in the past due to fears of pest infestations. These are all areas where the government needs to provide sustained support so that exports can continue unhindered to major western markets.

This is imperative as technical issues are among the main reasons why India is the second largest fruit producer, but only the 23rd in terms of exports. In vegetables, it is the third producer but only the 14th in exports.

In the case of maritime exports, the situation is a little better. India is the fourth largest exporter of seafood and is currently the largest supplier of shrimp to the United States. Recently, efforts have been made to promote the development of inland fisheries to capitalize on the success of maritime exports, but there is still a huge gap to be filled in terms of value addition for fisheries and seafood. yet, the stringent testing and verification requirements of developed countries have become non-tariff barriers.

Regarding wheat exports, however, the geopolitical situation has allowed this country to finally make a breakthrough in a raw material that has always had enormous potential. India may now become one of the main suppliers of wheat to the rest of the world. It will also provide a new market for farmers, especially those in northern states who are largely dependent on government supply programs for their sales.

It will also ensure that the government has the ability to liquidate wheat stocks that had accumulated due to the need for large-scale purchases from farmers. Much of the stockpile has been taken over the past two years through free food grain programs that have been formulated to support those in need during the pandemic. Even so, it is clear that the country is capable of producing enough wheat both to meet domestic needs and for export in the future.

The issue of rising food grain prices, however, cannot be evaded as it will add inflationary pressures to the economy. The central bank has already changed its stance and started to focus on controlling inflation by raising interest rates for the first time in several years. Wheat exports must therefore be approached with caution in the short term, but there is no doubt that they can be an important source of foreign exchange in the medium and long term. If efforts in this direction succeed, it will have to be admitted that the difficult geopolitical environment has brought a silver lining to one front.

Christi C. Elwood