India has been known for its large and rich arable land for ages. It always had a competitive advantage in agriculture production. India has been known for exporting premium quality rice and it now aims to do the same with wheat. The Russia-Ukraine war has presented a golden opportunity for India to fill the large void in global stocks of wheat. Ukraine and Russia exported enough wheat to feed 30% of the world. But due to the war, there has been a scarcity in wheat supply. Largest wheat importing countries like Egypt, Turkey, Indonesia, China, and Iran are now in a dire state due to wheat shortage. A shortage in the supply of wheat has soared the price of the commodity globally to ₹ 2,700; so much that it has crossed the minimum support price (MSP) of ₹ 2,015. The Government has assured exporters that the railways would provide better connectivity to the ports and ensure enough availability of railway rakes for wheat exports. The exporters in Madhya Pradesh have got reimbursement of the mandi tax they pay on exported wheat. Indian exporters believe that this opportunity for Indian wheat export may not remain just a short-term gap-filling opportunity but pave the way to make India a long-term reliable supplier of food to the world. Wheat exports in 2021-22 went up by 54.50 percent. In fact, in the current financial year (2022-23), wheat export is estimated to increase to more than 100 lakh tonnes from 70 lakh tonnes of export recorded in 2021-22. Recently Egypt, one of the largest importers of wheat from Ukraine and Russia, has approved India as its wheat supplier. India is the second-largest wheat producer with a share of 14.14% of the world’s production in 2020 but accounts for less than 1% of global wheat exports. One might question that despite being a country rich with arable land, why did we have to wait for the war & global shortage to push wheat exports? Why did India contribute a measly 1% to the global exports despite having surplus produce? To understand this, we need to understand the Minimum Support Price (MSP). In 1960 Green Revolution began in India and the government promoted the cultivation of a special variety of wheat. To encourage the farmers, the government incentivized the cultivation by promising to buy the produce at a guaranteed price. A Minimum Support Price for cultivation. The farmers were compensated for their efforts despite the actual demand for wheat. The production soared. Nobody knew the actual prices of the wheat because there was no bargain between buyers and sellers. As the wheat supply increased the prices plunged and a large stock of wheat started piling up. India was(is) producing more wheat than it could possibly consume. This was the perfect time to encourage an export program. However, the farmers found it more profitable selling it to the government at MSP than exporting it elsewhere. Another obstacle was that, according to the World Trade Organisation, countries must play fair while dealing in international trade, which means a country can’t ship a commodity if the government incentivizes the production of that commodity using financial incentives because it depresses prices and puts international producers in jeopardy. India produces around 107.59 million tonnes of wheat annually while a major chunk of it goes towards domestic consumption. India now has a golden opportunity to cater to global demand. Logistical bottlenecks, quality concerns, large volumes, fair international trade, creating warehousing capacity, and shortage of global containers are some of the challenges that India might face while encouraging wheat exports. India has an opportunity to earn a premium status by producing the highest quality wheat. Thank you.
Very well writtenđź‘Ź
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