New Delhi: The hampered supply chain due to the Russia-Ukraine war resulting in the global crisis of wheat brought an opportunity for India to increase its exports and project itself as a reliable supplier in the international market, it moved forward availing of the opportunity, but suddenly decided to ban wheat exports on May 13. This decision was reviewed by the Directorate General of Foreign Trade (DGFT), Department of Commerce on Tuesday, and the government announced some relaxation saying that those consignments registered before June 13 and handed over to the customs for examination will be allowed to export. As per the government, the previous order was issued to ensure India's food security and check inflation, but experts suggest that the situation would have been better managed without the imposed regulations.
Speaking to ETV Bharat, Chairman of the Indian Chamber of Food and Agriculture MJ Khan said that the possible reason for a sudden ban was the rise in consumer price because as per trends in the last 25 years "we have seen that government prefers consumers rather than market or farmers getting the better price. In the current scenario, a large number of private players were entering the market to buy wheat as global demands were rising. Also, the harvesting season in India was matching this rising global demand. Thus India was emerging as a reliable supplier and even those countries that never procured from India were in the queue to add India as a new destination. Countries like Egypt, Turkey and African countries are among them. However, the estimated yield was revised recently and it was around five to six million tonnes less than the previous estimate of 112 million tonnes. This is also one of the reasons why this sudden decision came in," he added.
The government procurement by FCI has also been low due to less yield and rising demand this season. With private players offering more price than MSP, farmers preferred to sell in the open market, which brought down the government procurement to less than half of what it procured during the previous year. Last year the government procured a record 433 lakh metric tonnes of wheat, but this year's estimation is around 200 lakh metric tonnes only. As per the government, low procurement would affect their buffer stock and PDS quota, but Farmers' Groups and experts have been saying that the government has enough stock in hand and it should not be bothered too early.
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"The government had set a target of exporting 15 million tonnes of wheat this year and they had nearly exported half of it by the end of April. Even if they talk about domestic compulsion, we have more than enough buffer stock to meet our needs. This was an opportunity for India, but the other reason could be international diplomacy as well. The world market is dependent on India as it is the second-largest producer of wheat and the government maybe want to make the world leaders realise India's importance and negotiate diplomatically on other issues as well" said MJ Khan.
It was a win-win situation for farmers if they were getting more than MSP in the open market, but low yield hampered their prospects first and now the government regulations on the export of wheat further brought down the price in the market. "If farmers were earning more, the government should have let it happen. The other benefit for the government was to establish the country as a large exporter of wheat, which could have benefited us in the long run because once the contracts had been signed. Similarly, India's image as a reliable and credible supplier has been shattered time and again and it will be shattered yet again. India has thus missed the long-term advantage," said the expert.
According to the expert opinion, the government could have released its buffer stock to check the price in the open market and continued with the export of wheat.
"This could be a hyper-conservative outlook, but doesn't stand on figures because the buffer stock capacity of government is around 37.5 million tonnes and what we require for buffer security is around 7.5 million tonnes. Thus we still have a surplus of around 30 million tonnes. Even if we put aside the requirement of PDS, India could afford to go for 15 MT of exports. We were in a comfortable situation, but it remains to be seen whether the government chose this extreme step to satisfy its consumer gallery or International diplomacy," he concluded.
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