Wheat crisis In India

In Context 

Recently, India banned wheat exports with immediate effect as part of measures to control rising domestic prices.

Present Situation 

• India is the second-largest producer of wheat in the world, with China being the top producer and Russia the third-largest. 
• After five straight years of a bumper wheat output, India has had to revise downwards its estimated production. 
  • The revised crop size is reported as 102 mmt. 

Why has wheat production dwindled?

• Unprecedented heat waves across the north, west and central parts of the country have caused substantial loss to the yield this year. 
  • The “early summer” in states like Punjab, Haryana and Uttar Pradesh has also affected crop yields.
• Lower output coupled with strong export demand then pushed local prices higher, often above the government’s fixed procurement price. 
  • That prompted farmers to sell wheat privately instead of to the state, whose purchases to run welfare schemes slumped due to tight supplies.

Challenges faced by 

• World 
  • Russia and Ukraine jointly account for about 30% of global wheat exports. 
  • Ukraine’s exports are severely hampered because the war has forced it to close its ports, while Russia’s exports have been hit by Western sanctions. 
    • Asian importers are likely to be in deep trouble. 
    • India was the Ukraine/Russia alternative, especially for feed wheat.
  • India’s ban could drive global prices to new peaks given already tight supply, hitting poor consumers in Asia and Africa particularly hard.
  • Agriculture ministers from the G7 industrialised nations immediately condemned India’s decision

• India 

• The government wheat procurement has dipped, concerns are being raised about the stability of prices in the country and the availability of grain for internal consumption.
• Farmers across north Indian states are facing a shortage of dry fodder due to the wheat crisis.

Way Ahead 

• Set up systems to get reliable and timely estimates of crops. 
• The National Crop Forecasting system including “FASAL soft” will have to be reset. 
• The much-hyped Drone-Artificial Intelligence- Blockchain technologies should be deployed to : 
  • Prepare a correct estimate of the crop well in time, for the government to plan and act ahead of any crisis.
• Reliable price data has always been a missing link in policy planning.
  • Mandatory reporting of price (not just the APMC price data) of all large (limits can be defined) transactions are a must. 
• The government should be aware of the quantum of private stocks, preferably in anonymised, aggregated formats.
  • This needs legal backing. A provision to mandate the submission of anonymised stock data from all warehouses should be put in place.
• A robust system (drones, satellites, ground data) to monitor weather conditions like temperature, moisture stress, etc needs to be put in place immediately with a focus on key crops and major growing regions. 
• The government has to ensure that the market price for the domestic consumer is not determined by private players .