The war between two of the world’s largest traders of wheat – together, Russia and Ukraine account for one-fourth of its global trade – has led to worries over the supplies of the staple grain. Multinational traders are now turning to India, the world’s largest producer and consumer, and prices are already 25% higher compared with the minimum support price at which the government buys the grain. Farmers are keen to sell to private traders, and that is expected to leave less wheat for the government to purchase.
Experts said the government’s wheat procurement bill could fall by 15-20% in the next marketing season. The fiscal benefit would be significant, as it had spent ‘85,581 crore in 2021-22 to procure wheat. Traders expect exports of 10-15 MT in the next wheat marketing year. Shipments this year are estimated at 7 MT. “All the global commodity companies have become active, which has led to a sudden jump in wheat prices,” said Ajay Goyal, director of Shivaji Roller Flour Mill.
In India, production of wheat exceeds demand and even when its granaries are full, the government is forced to procure the grain from farmers at the MSP as it is a politically touchy subject. The Food Corporation of India had procured 43.33 MT wheat in the 2021-22 crop year and has a target of 44.4 MT for next season.
While the farmers stand to benefit from increased prices, the government is also seen as keen on exporting more of the grain.
