India’s wheat export boom brings a bonanza to farmers, and budget relief

Farmers use a combine to deposit harvested wheat into a tractor trailer on a field in Indore, Madhya Pradesh, India, March 22, 2022. REUTERS / Rajendra Jadhav

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INDORE / SARANGPUR, India, April 29 (Reuters) – For the first season in over a decade, Indian farmer Rajensingh Pawar is selling his new wheat crop to private traders instead of the state stockpiler, as a global wheat price rally gives India’s suppliers a rare profitable export window.

The state’s grain procurement agency is racking up huge debts as a buyer’s last resort.

Pawar and his peers harvest a record Indian wheat crop, giving growers a rare opportunity to sell their grain at near-global prices.

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“After a long time, traders are ready to pay more than the MSP,” Pawar, 55, said, referring to the minimum support price at which the Food Corporation of India (FCI) buys grain from farmers.

“India’s rising wheat exports have helped farmers like us to get a far better return,” he said, adding that the state of Madhya Pradesh is known for its high-quality wheat.

World wheat prices since 2005

Before the global wheat prices of nearly 50% surge, India struggled to export the grain due to the MSP to the politically powerful farm lobby that made Indian wheat more expensive than world prices.

But the high international prices, the consecutive record crops, the weaker rupee against the dollar and improved internal logistics made the shipments from India attractive.

“This is a golden opportunity for India to export its surpluses,” said Nitin Gupta, vice president of food and agri-business Olam Agro India.

For the international wheat markets, India’s sales are offset by a supply shortfall in Ukraine-driven disruptions in the Black Sea region, crop cuts in Canada and quality downgrades in Australia. read more

Key suppliers by Wheat Exports

MSI of 20,150 Rupees ($ 262.88) A tonne means FCI’s wheat purchases are expected to fall drastically for the first time in a row.

Lower Mean State Budget Savings Last year, India spent 856 billion rupees ($ 11.2 billion) on buying a record 43.34 million tonnes of wheat from farmers, filling state granaries with a brimming and boosting national debt.

This year’s FCI purchases could fall below 30 million tonnes, trade and government officials said.

Indian traders have signed wheat export deals at between $ 330 and $ 335 a tonne free on board, said Rajesh Paharia Jain, a New Delhi-based trader. This is almost $ 50 a tonne cheaper than rival suppliers at global prices and large surplus stocks at home that make it easy for Indian suppliers to offer a discount, but still well above local prices.

India wheat production and exports since 2000

Following a flurry of export deals signed in February and March, India’s wheat shipments touched a record 7.85 million tonnes in the fiscal year to March – up 275% from the previous year. read more

Exports could jump 12 million tonnes in the 2022-23 fiscal year, traders said, making it a serious player in global markets.

India’s exports have also been helped by a sharp jump in crop quality. Some of the world’s most discerning wheat consumers are those who have recently made low-quality product and exporters who have previously accepted limited-cost markets.

For the first time, top global wheat importer Egypt has bought a grain from India, which sources say has helped establish a reputation as a top tier supplier. read more

High quality seeds of Rapid and Widespread adoption have underpinned the quality climb. Introduced over the past decade, the top 10 wheat seed varieties accounted for more than 70% of the roughly 31.5 million hectares planted last year, said Gyanendra Pratap Singh, chief of the Indian Institute of Wheat and Barley Research.

“Earlier, India was not known for its quality wheat, but India’s wheat is now as good as any other high-quality wheat from other major global suppliers, and that’s because of the new seed varieties,” Singh said.

Alongside improved farm practices and better mechanization, better seeds have been transformed from India’s wheat market to a variety of high-quality feed varieties such as Durum, Lokwan and Sharbati used in pizza, pasta and premium bakery products.

“Newer varieties have helped farmers get better protein content with higher yields,” said Amit Takkar, chief of brokerage conifer commodities.

“Indian wheat with 12% to 13% protein is pretty common now and that compares favorably with APW’s (Australia Premium White) 11.5% to 12% protein.”

Lauding Farmers and Scientists for Helping India emerge as a new force in the wheat markets, said Sudhanshu Pandey, the top official at the Food Ministry, who said the government was determined to help India become a regular exporter of high-quality wheat.

The only impediment to that rosy outlook could be a drop in crop yields due to a sudden rise in temperatures this year, traders said.

The government has forecast a record 111.32 million tonnes at this year’s wheat output, but may revise the recent hot spell saps crops that are still trickling into the wholesale grain markets.

In the grains market of Madhya Pradesh, farmers are jubilant about exports.

“Prompt payments and higher prices are the wheat of better grades for us,” Farmer Narendra Pariyar said. “The wheat export boom has really been a gold mine for farmers.”

($ 1 = 76.65 rupees)

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Reporting by Mayank Bhardwaj and Rajendra Jadhav; editing by Gavin Maguire and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

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