From a pledge to cater for a global food shortage to a dramatic ban on wheat exports, India’s policy flip-flop over the past few weeks were caused by a delay in estimating the loss of the grain’s production in the wake of the intense heatwave since March. Even before the hot summer clipped the wheat harvest, many had, in fact, questioned the farm ministry’s bumper output projections of 111.3 million tonne for the crop year through June 2022.
The fear of a smaller harvest got reinforced after the heat wave exacerbated in late March. But a seemingly casual approach by the relevant agencies and the farm ministry in treating early warnings made the matter worse. And at stake now is the credibility of the government’s farm data collection system, which has been crying for reforms for years.
The inflated production estimate firmed up in February, which hasn’t been formally revised yet despite dwindling mandi arrivals, led the government to falsely believe it could supply to the world, until its procurement collapsed. While the agriculture ministry follows a certain calendar for releasing the output estimates, it had not informed other wings of the government on time about the likelihood of substantial output losses. That it needs to be more responsive, especially when the weather plays mischief, can, thus, be hardly over-emphasised.
On April 13, Prime Minister Narendra Modi said that he had offered, during his talks with US President Joe Biden, to supply India’s food stocks from official granaries to the world if the World Trade Organization rules permitted.
On April 15, enthused by the deal with Egypt and a surge in interest for Indian wheat from others, commerce & industry and food minister Piyush Goyal exuded confidence that exports of the grain in the current fiscal will breach even the initial target of 10 million tonne and may even touch 15 million tonne.
Even after media started reporting about a decline in wheat yield in key production states like Punjab due to the heat wave from the third week of April, the farm ministry gave no such indication publicly.
Subsequently, on April 25, FE also reported about the looming supply crunch and how even private players were active in purchasing grains from farmers in Punjab and Haryana, in an unusual scenario, as market prices had shot up well above the minimum support prices at which the government procures the grain.
On May 4, food ministry officials insisted that there was no case for curbing wheat exports. At the same time, they said, based on the inputs provided by the agriculture ministry, the estimate of wheat production for the crop year through June will be trimmed to 105 MT, down from its February projection of 111.3 MT.
The government’s wheat procurement so far has been just 18 MT, way short of the initial aim of 44 MT and compared with the revised target of 19.5 MT. Despite the government’s decision to extend the date of purchase in few states, analysts believe the final procurement may even fall short of the scaled-down target and settle at just about 18.5 MT, the lowest in well over a decade.
On May 6, Modi chaired a key meeting of officials for reviewing various aspects of wheat supply, stock and exports. The PM asked the officials to ensure the grains and other farm commodities that are being exported from the country don’t falter on quality parametres.
On May 12, the commerce ministry announced sending trade delegations to Morocco, Tunisia, Indonesia, Philippines, Thailand, Vietnam, Turkey, Algeria and Lebanon for exploring possibilities of boosting wheat exports from India. The ministry, in fact, was planning to organise a series of meetings on exports in major wheat growing states.
On the same day, home minister Amit Shah chaired a meeting of the group of ministers on essential commodities, which saw the participation from the ministries of agriculture, food, consumer affairs and commerce. Sources told FE that after taking stock of the domestic availability, a decision was made to impose a ban on exports.
Ajay Vir Jakhar, chairman of the Bharat Krishak Samaj, said, “There is absolutely no credibility of cereal production data in the country. In the absence of a robust data source on production, assessing supply situation becomes so risky.” He said farmers will be hit hard and traders will be cautious in buying the produce at a premium for export purposes.
“Prior to imposing an abrupt ban on exports, a certain cushion must also be given to exporters, as sudden policy changes bring in unwarranted panic, and generate irreversible losses, as deals were already firmed up and supplies were already on their way to the port,” a Mumbai-based wheat exporter said.
