Amidst the unfortunate and humbling realities of the Russia- Ukraine war, Indian farmers find new markets and better prices for their produce. India’s support to various countries for averting a food crisis during this time will play a critical role in establishing a solid foundation for long-term trade relations.
By January 2022, the world economy was looking forward to scripting a stronger recovery. However, the Russia-Ukraine war escalated global uncertainties to a whole new level. In the integrated, globalised economy, the warring nations have severely hurt many countries in Europe, the Middle East, Africa and Central Asia with no geopolitical interest in the conflict. Many of these nations are
developing, with strong import dependencies on Ukraine and Russia. Russia and Ukraine are major exporters of some of the key food products to the world. Ukraine accounts for 40 per cent of global seed oil exports (especially sunflower oil), fuelling high inflation in cooking oil in India and around the world. Ukraine also contributes 13 per cent of corn exports, and additionally, Russia exports 14 per cent of fertilisers. But nations are getting impacted the most due to a shortage of wheat exports, a staple and essential food grain around the world. Both countries collectively share over a quarter of total wheat exports globally. Some economies import 75 per cent of their wheat consumption from these two countries. This is creating a significant problem, especially for resource deficient nations.
The Global Response to the Wheat Crisis
Ukraine and Russia cumulatively were expected to export 14 million tonnes of wheat from March to June, which has completely halted. As a result, the world is looking toward India to support the affected nations by exporting as much wheat. India stands eighth amongst the top 10 exporters of wheat. Barring Ukraine and Russia, it is preceded by the European Union, the United States, Canada, Australia, and Argentina. According to the Food and Agriculture Organisation (FAO), wheat inventories in Canada and the USA are affected by reduced harvest in FY2022. While Australia has already exhausted its maximum shipment capacity, Argentina largely focuses on inflation challenges at home. Another major factor is that wheat is a winter crop in many countries, unlike India, where it is a summer crop.
At the forefront of addressing the Global Food Crisis
Amidst the unfortunate and humbling realities of the Russia -Ukraine war, India finds herself in an important position staring at some potential opportunities. This time it is to address an evolving humanitarian and food crisis, especially concerning the shortage of wheat. Although India holds a lower spot in the wheat export rankings, we are at the forefront of addressing the International Food Crisis. Despite some unique challenges at home, the Indian government again heeds its guiding spirit, “Vasudhaiva Kutumbakam” or “The World Is One Family”. India has repeatedly echoed and promoted this cultural ethos by exhibiting its magnanimous support to countries worldwide in the hour of need and as a principal and leading virtue in addressing and resolving the international crisis. Apart from the global scenario, several domestic factors are helping India export wheat to other countries. First, the strong and visionary statesmanship at the Centre under Prime Minister Narendra Modi allows India to take necessary measures to maximise the opportunity. With an annual production of over 107 million tonnes, India happens to be the world’s second-largest wheat producer. Although 80 per cent of the wheat produced is consumed domestically, we have consistently recorded bumper crops. Hence, the government is storing wheat under a mammoth public stockholding programme for its food security purposes, which also feeds into various food programmes.
Benefits from Wheat Exports
India’s prudent and visionary move to capitalise upon the opportunity has several benefits for the country and, most importantly, our farmers. The following are some of the key benefits for India in investing its resources to mitigate the wheat crisis.
Farmers – the biggest beneficiaries
The price of wheat is rising globally due to International shortages, and it is the farmers who will benefit
the most. For the first time, Indian farmers are getting access to international markets. They will be selling wheat to trading companies and private players well above the minimum support price.
The opportunity positions them well for a bumper earning for their produce which they duly deserve.
Digitalised trade
Due to technological advancements and global uncertainties, international trade depends upon the digital medium to conduct trade. Consequently, Indian players and farmers are receiving requests digitally. Moreover, it brings greater transparency to the system, with stakeholders knowing what they will get. It also creates avenues to strengthen the entire value chain, from cultivation to purchase to
exports, by adopting resilient food systems.
International learnings
As various markets open for India, all the players in the value chain are up for tremendous learning. The quality, grade, and type of food crop accepted in various countries; their trading regulations,
policies, and trends; unique challenges and demands; and so on. As India envisions boosting its exports incrementally, the experience of selling to newer markets will prove invaluable in designing future export strategies.
Export Strategy at Play
Having taken a micro-level account of the country’s wheat reserves, the Central Government has reassured the people and stakeholders of having healthy volumes, even after exporting wheat. The rumours hinting toward shortages within the country have been dismissed unanimously by all key government bodies and agencies. As of April 1, India sits on 18.99 million tonnes of wheat reserves in government godowns, which is more than 2.5 times of minimum operational-cum-strategic reserve requirements. The Centre holds enough grain reserves to be distributed through the Public
Distribution System (PDS) and other food programmes
India has already exported a record 1.4 million tonne of wheat in April. The Government is further keen on taking all necessary steps to make the most of the opportunity. Major wheat importers like Egypt have already agreed to import from India. Additionally, the government is sending trade delegations to over nine big wheat importing countries as it endeavours to meet its grain export targets for the fiscal year. The Centre is also making substantial efforts to educate the wheat farming community across Haryana, Punjab, Madhya Pradesh, Uttar Pradesh and Rajasthan. The focus is to ensure that high- grade, export quality wheat is shipped to other nations to make a strong statement about Indian wheat in the global market. Equally important has been the role of the private sector players like Agribazaar, which is the first amongst private companies to finalize an export deal facilitated electronically. As per the agreement, the electronic mandi will be exporting 50,000 metric tonnes of
wheat worth Rs 125 crore to Turkey. Last but not least, this opportunity of shipping wheat to other countries is not merely a trade opportunity. The impact of the Ukraine and Russia wars will be long- term. India’s support to various countries for averting a food crisis during this time will play a critical role in establishing a solid foundation for long-term trade relations. The opportunity will help us capitalise on newer markets and boost our exports and strengthen India’s leadership position in the world.
