Indian Farmer Group Warns of 'Domestic Blowbacks' as New Delhi Scales up Wheat Exports

While India has increased its wheat export targets this year and inked deals with countries such as Egypt, PM Modi’s government has at the same time reduced the federal allocation of wheat to the poor under two schemes—Pradhan Mantri Garib Kalyan Yojana (PMGKY) and the National Food Security Act (NFSA). The schemes cover around 800 million Indians.

A leading Indian farmers’ group has called on Prime Minister Narendra Modi’s government to impose some "checks and balances" on the export of wheat from the country in the coming months.

Deepak Lamba, the vice-president of Jai Kisan Andolan (Hail the Farmers’ Movement), has told Sputnik that the lower productivity of the wheat crop due to record summer heat in March and April and a focus on exporting grains to foreign countries will have “domestic blowbacks” for the Indian consumer.

Jai Kisan Andolan is one of the founding members of the Samyukta Kisan Morcha (Unified Farmers’ Forum), an umbrella organisation which spearheaded countywide protests against three farm laws last year.

According to Lamba, the “blowbacks” include potential shortage of wheat for domestic consumers which may lead to increased cost of the food grain. "The country's poor, which rely on wheat subsidy by the federal government, will be the worst impacted as the availability of wheat on the market will be hit," he states.

India’s Ministry of Commerce and Industry reported last month that the wholesale inflation and retail inflation for wheat in March 2022 was at 14 and 7 percent respectively, the highest since 2017. The Food and Agricultural Organisation (FAO) Food Price Index, an indicator of food prices, averaged 158.5 points in April, after a record high of 159.3 in March.

“We are approaching a situation where we are increasing our wheat exports despite serious concerns about the projected wheat production and procurement this year,” stated Lamba, who is based in the Haryana state.

Lamba recalled a similar situation in 2005-2006, when New Delhi allowed private players to directly buy wheat from the farmer. The Food Corporation of India (FCI), the federal agency responsible for procuring wheat, was left with little wheat on the market and the government had to ultimately import the grain to meet the domestic shortfall.

Conventionally, the government has been the primary procurer of wheat in India, buying the grain from the farmer at the Minimum Support Price (MSP). The transaction is carried out at an agricultural market, or mandi. At present, the wheat sourced by the government is used to feed the poor through federal schemes which support nearly 800 million economically disadvantaged Indians.

“We can’t allow a repeat of that scenario,” declares Lamba, echoing concerns expressed by other agricultural experts. "But the situation this time around will be much worse than it was back then," he cautioned.

The comments by Lamba come as New Delhi tries to plug the shortfall in the global wheat supply caused by disruptions on account of the sanctions against Russia over its special military operation in Ukraine.

Reportedly, wheat supplies in nearly 55 nations have been hit and led governments to look for alternative exporters as Russia and Ukraine, two of the biggest grain exporters globally, face constraints in getting the crop to foreign markets. The projected combined global shortfall in wheat supply due to the Ukraine crisis is reportedly around 60 million tonnes.

To capitalise on the crisis and benefit Indian wheat farmers, New Delhi has scaled up its export targets for the ongoing year to 10 million tonnes from the seven million tonnes (approximately) it exported last year. Commerce and Industry Minister Piyush Goyal remarked last month that the quantity of wheat exported from India could even reach 15 million tonnes.

Prime Minister Narendra Modi also touted New Delhi’s capability to meet the global wheat shortfall during a public event in Germany this week. "Big nations are worried about food security, and at this time India's farmers are coming forward to feed the world," the Indian PM said.

The 'shrivelling' of wheat due to the onset of early summer (in March and April) in the northern Indian states of Uttar Pradesh, Punjab and Haryana, the biggest wheat producers in the country, have affected the crop output. The Indian Meteorological Department said this month that these parts of the country experienced the “hottest summer” in 122 years.

In India, April is the harvesting season of the wheat crop, with the next harvest scheduled for April 2023.

While it has scaled up its export targets for wheat, India this month has also decreased the projected annual wheat production target from 111.3 million tonnes predicted in February this year to 105 million tonnes.

Additionally, the procurement of wheat directly from the farmer by private players driven by exporting the crop to maximise profits has affected the sourcing of wheat by FCI.

In the state of Punjab, the government has halted the public sector procurement of wheat from agricultural markets, or mandis, due to shortages.

India’s Department of Food and Public Distribution (DFPD), said in an official release on 4 May that the government had been able to procure 16 million tonnes of wheat by 2 May, nearly 30 percent less than what it had been able to buy from farmers during the same period last year. The wheat procurement target for this year has been set at 44 million tonnes.

However, the federal authorities are lagging their procurement targets in all the major wheat producing states. The DFPD says this is due to the effect of a heat wave on crop productivity, as well as private players lapping up the wheat directly from farmers at rates higher than the government-stipulated MSP.

Overall, New Delhi has been forced to reduce its procurement targets by more than 50 percent to nearly 19 million tonnes, as per an official release.

How Much Wheat Does Indian Gov’t Have in Reserves?

Sudhanshu Pandey, a Secretary at India’s DFPD, said on 4 May that the FCI had wheat reserves of 19 million tonnes on 1 April, with another 19 million tonnes set to be procured this year. Around 30 million tonnes of this is expected to go towards PMGKY and other federal schemes to support the poor, as per Pandey.

This would leave the FCI with around eight million tonnes of wheat reserves on 1 April, 2023. The official rules stipulate that the government must have reserves of at least 7.5 million tonnes on 1 April every year.

Lamba from Jai Kisan Andolan, however, argues that the FCI’s procurement targets are still “far-fetched”.

“The reports we are getting from villages in Haryana and Punjab are not encouraging at all. The effect of the heat wave on the wheat crop is more dire than the government claims. Around a third of the wheat crop might have been damaged,” he argues, noting that the government’s revision of wheat production was less than five percent.

“In Haryana and Uttar Pradesh, many farmers have already sold their produce to private players, who are eyeing lucrative foreign markets rather than selling their wheat domestically or to the FCI,” Lamba underlines.