The Government of India recently imposed restrictions on Wheat exports, in a bid to control rising food prices, ensuring domestic food security. However, this comes after India’s record exports of both Rice & Wheat in 2021-22 putting the export targets for 2022-23 in jeopardy.
The Government of India recently imposed restrictions on Wheat exports. Among the reasons cited for the imposition of these restrictions are the controlling rising food prices, ensuring food security domestically as well as to the countries that India has committed to.
This was followed by certain relaxations which allowed for export of consignments that have already been registered for customs. This decision by the government comes in the wake of an increase in international demand for wheat and surging food prices, impacted by the Russia-Ukraine conflict. Russia has been the largest exporter of Wheat in the World and Ukraine is among the leading exporters. This had presented India an opportunity to export wheat at better prices. India has been a marginal player in global wheat exports with decrease in exports starting 2012-13 only to increase in 2020-21 & 2021-22.
The Government of India has on multiple occasions expressed its intent to increase the export of food grains. Earlier, in an international forum, Prime Minister Narendra Modi said that India is ready to supply Food stock to the world, if WTO permits.
However, with the Ministry of Agriculture and Farmers Welfare releasing its third advance estimates of food grain production in the country for 2021-22, the government seems to have taken a step back. While the latest estimates predict a record food grain production, there is a fall in Wheat production compared to its second advance estimates and also falls short of the target for 2021-22.
While the increase in temperatures is cited as the prime reason for the fall in wheat production, the government cited its policies as a contributing factor for increase in production of overall food grains.
But what has been the trend in India’s food grain production & exports over the years? In this two-part series, we look at trends of production and export for few of the important food grains & pulses in the country. In the first part we analyse the trends for Rice & Wheat, which are the two major crops and constitute about 3/4th of the total food grains production in the country.
Latest estimates indicate fall in Wheat production compared to 2020-21
In terms of volume, Wheat is the second most produced food grain in the country. Uttar Pradesh, Punjab, Haryana, Madhya Pradesh & Rajasthan are among the major wheat producing states in the country. The annual production of Wheat in India has increased over the 10-year period. In 2013-14, the production was 93.5 million tonnes. Despite a lower advance estimate in 2021-22 than the previous year, the production is at 106.4 million tonnes i.e., nearly 14% more than the annual production 10 years ago.
However, the trend over the last ten years is not consistent. In 2014-15, there was a major fall in the production of Wheat by nearly 9.7%. Bad monsoon and unfavourable weather conditions contributed towards a fall in the production of wheat in that year. Annual Wheat production showed an increasing trend in the ensuing years, although the growth rate remained unstable.
If the third advance estimates hold good, 2021-22 would be the first time that the production fell compared to the previous year after 2014-15.
The third advance estimates indicate a production of 106.4 million tonnes as against 109.59 million tonnes in 2020-21. Although 2020-21 marked a record annual production of 109 million tonnes, the growth was only 1.6%, lower than the growth of 4.1% in 2019-20. While there is a slowdown in the production of wheat over the last two years, the trend in the exports of wheat is the opposite.
Record export of Wheat in 2021-22
India is a marginal player in global wheat exports as noted recently by the Union Commerce Minister. This was also highlighted in the latest press release related to the ban on Wheat exports.
There has been a significant increase in India’s wheat exports in the recent years. As per the information available with APEDA (Agricultural and Processed Food Products Export Development Authority), during 2012-13 & 2013-14, India exported 6.51 million tonnes & 5.56 million tonnes of Wheat respectively. This fell in 2014-15 to only 2.92 million tonnes. It ought to be noted that there was a significant fall in the production of Wheat in 2014-15, as indicated earlier in the story. The volume of Wheat exported in 2014-15 to countries like Bangladesh, South Korea, UAE, Djibouti etc. fell drastically compared to 2013-14.
The overall volume fell further in 2015-16. This is reflected in the fall in volume exported to countries like Bangladesh. In 2013-14, the wheat exports to Bangladesh were around 1.98 million tonnes, which reduced to 1.12 million tonnes in 2014-15 and to 0.37 million tonnes in 2015-16. This fell further in the ensuing years. The decreasing trend continued until 2019-20.
In 2020-21, the exports increased almost 10 times to 2.08 million compared to 0.21 million in 2019-20. A major portion of this can be attributed to an increase in the wheat export to Bangladesh, with 1.15 million tonnes exported during the COVID-19 year. Export of wheat further increased to 7 million tonnes in 2021-22, with 50 % of the exports to Bangladesh.
A target of 10 million tonnes of wheat exports is set for 2022-23. As per an update by Ministry of Commerce & Industry, around 3 million tonnes of export of Wheat is estimated to Egypt for 2022-23. Egypt is among the world’s leading importers of Wheat, with a major portion coming from Russia & Ukraine. The prevailing conflict in these two countries could have helped boost exports from countries like India if the production had increased as anticipated. India is now being listed as one of the origins for strategic commodity (in this case, Wheat) by Egypt.
While India has assured wheat exports to traditional export partners, the extent of the impact of export restrictions is still not known in meeting India’s export targets for 2022-23.
Consistent growth recorded in production of Rice
Over the last 10 years (2012-13 to 2021-22), the annual production of Rice has increased by around 23%. The growth rate is more prominent in the recent years. In fact, in the beginning of the 10-year period, there was a phase of declining annual production of rice. In 2012-13, the annual production was 105.23 million tonnes, which reduced to 104.41 million tonnes by 2015-16. In the ensuing years, there was a year-on-year increase in the annual production of Rice in the country.
For 2021-22, the target set for rice production was 121.1 million tonnes. The third advance estimates released by the Ministry of Agriculture and Farmer Welfare pegs the production of the rice in the country across both Kharif & Rabi at 129.66 million tonnes, a slight increase over the second advanced estimates of 127.9 million tonnes.
Significant increase in the export of non-Basmati rice in 2020-21
Data as per APEDA indicates that as 17.72 million tonnes of Rice worth USD 8.82 billions was exported for the year 2020-21. This is a significant increase over the previous year, where-in 9.49 million tonnes of rice was exported. While the export of Basmati Rice has remained constant in these two years, the export of non-basmati rice increased from 5.04 million tonnes in 2019-20 to 13.09 million tonnes in 2020-21.
The increase in 2020-21 in the case of non-Basmati rice is due to increase in the volume of exports to Nepal along with a few African countries like Benin Somalia, Senegal etc., a substantial increase in export of rice to Bangladesh, and to other newer countries.
The value of non-Basmati rice exports in 2020-21 was USD 4.8 billion. As per an update by government in April 2022, the value of non-Basmati rice exports increased to USD 6.15 billion in 2021-22. Meanwhile, the volume of export of Basmati rice has increased slightly over the years. The major destinations for Basmati Rice export are Saudi Arabia, Iran, Iraq, and other Middle Eastern countries along with USA & U.K.
Exports can present a new avenue for farmers to sell their produce
Rice & Wheat are among the major food grains for which the government announces a ‘Minimum Support Price’ and facilitates procurement through FCI & State agencies. The procurement by the government helps in ensuring Food security in the country through the initiatives under National Food Security Act (NFSA), and other schemes.
A substantial portion of the Rice & Wheat produced in the country is procured by government. However, this is not uniform across the states with only a few sates benefitting from the MSP provided by the government, with various challenges plaguing the procurement. Apart from this, there are also challenges with the storage of the procured food grains, with the government procuring more than what is required for food security.
One of the main reasons for farmers selling their produce, especially rice & wheat to FCI & State agencies, wherever feasible is that MSP is usually higher than the market price. With the challenges in marketing & procurement of rice & wheat, exports could potentially provide a new avenue for the farmers to sell their produce at a better price, as witnessed in recent increase in wheat exports due to Russia-Ukraine conflict.
However, the challenges in sales linkages, accessibility of small farmers to these markets would continue to be roadblocks for the farmers. All this would mean middlemen benefitting rather than the farmers. The quality of the rice & wheat produced in India could be another determining factor.
The continued increase in demand for Basmati Rice is an example of the export potential to countries where such a demand exists. In the next part of the story, we look at the trends in production & export of other food grains & pulses.