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India Steps Up Wheat Exports Amid Supply Disruptions Due to Ukraine Crisis

FILE - A combine deposits harvested wheat in a tractor trolley at a field on the outskirts of Ahmedabad, India, March 16, 2022.

India is expected to reduce shortages of wheat on global markets created by the war in Ukraine as overflowing warehouses help it step up exports.

Although India is the world’s second biggest wheat producer after China, it has been a small exporter, selling wheat mostly to Bangladesh, Sri Lanka and some Middle Eastern markets.

But as supplies from Russia and Ukraine are threatened by the war, India is eyeing markets across Africa and Asia. The Black Sea region is one of the world’s important grain-growing regions and the two countries together account for about 30 percent of global exports.

Egypt, the world’s largest wheat importer, approved India as a supplier after it sent a trade delegation to the country last week as it seeks alternatives to shipments from Russia and Ukraine. Indian officials have said they aim to supply three million tons of wheat to Egypt this year.

“Our farmers have ensured our granaries overflow & we are ready to serve the world,” India’s Commerce and Industry minister, Piyush Goyal, said in a tweet following the Egyptian delegation's visit.

After holding a virtual summit with U.S. President Joe Biden last week, Prime Minister Narendra Modi said he had told the American president that India could step up food supplies to the world.

Farmers harvest wheat crop in a field on the outskirts of Amritsar on April 12, 2022.
Farmers harvest wheat crop in a field on the outskirts of Amritsar on April 12, 2022.

Modi said India had "enough food" for its 1.4 billion people and was "ready to supply food stocks to the world from tomorrow" if the World Trade Organization allowed.

India is relying on surplus stocks in its warehouses as it eyes exports -- its vast northern and central plains grow millions of tons of wheat and farmers harvested bumper crops for five straight years until 2021.

The country is holding nearly two-and-a-half times the buffer stocks that it needs to maintain. Millions more tons will be added this month as farmers bring their produce into markets following the wheat harvest.

India’s exports have traditionally been low because the government buys huge stocks of wheat from farmers at guaranteed prices – those prices are usually higher than overseas market prices, meaning exports are not competitive.

But the huge increase in global prices has changed that, making it lucrative for traders to sell Indian wheat abroad .

World food prices hit an all-time high in March as the war in Ukraine “spread shocks through markets for staple grains and vegetable oils," the U.N.’s Food and Agriculture Organization said in a statement this month.

An increase in exports was already witnessed in the fiscal year that ended in March – India’s wheat exports hit 7.85 million tons compared to 2.1 million tons in the previous year.

India is targeting exports of 10 million tons of wheat this year, but that could go up to 15 million tons if conditions remain favorable, Commerce Minister Goyal has said.

Laborers uses a shovel to separate grains of wheat from the husk at a wholesale grain market on the outskirts of Amritsar on April 16, 2022.
Laborers uses a shovel to separate grains of wheat from the husk at a wholesale grain market on the outskirts of Amritsar on April 16, 2022.

Experts say that while it is possible to sell more wheat abroad than in the past, the government should be cautious as it looks to accelerating exports.

“We need to keep a very close watch on domestic stocks because the next crop will only come next April, so we must ensure sufficient reserves,” said Harish Damodaran, agriculture editor with The Indian Express newspaper. “We should not move from saying we are going to feed the world to a situation where we suddenly have to curtail exports.”

Experts also stress that in a country of 1.4 billion people, India's food security will have to be an important consideration, especially amid warnings by the World Food Program that the disruption in supplies due to the war in Ukraine could lead to the worst global food crisis since World War II.

There are also fears that forecasts of a bumper wheat crop this year may not pan out. Unusually high temperatures in March, when the crop ripens in India, may have hurt output.

Pointing out that the government runs a massive food subsidy program in which it supplies both rice and wheat at cheap prices to nearly 700 million poor people, food policy analyst Devinder Sharma said, “We are walking on a tight rope. We must set up an upper limit for exports. We have to be treading very cautiously.”