India might import wheat, a blow to Modi’s vision to feed the whole world.
Following Russia’s invasion of Ukraine, Prime Minister Narendra Modi openly declared that his country was prepared to ‘feed the world.’ The administration must review grain imports in less than four months.
Even before Modi made his vow, India’s wheat output was threatened by a record-breaking hot wave that began in March. This reduced output and increased local costs, making life more expensive for hundreds of millions of Indians who rely on grain to create staple meals like naan and chapatis.
In mid-May, the government restricted exports due to indications that a big wheat harvest might not occur. According to Food Corp. of India, state reserves fell to their lowest level in 14 years in August, while consumer wheat inflation is close to 12%.
Authorities are preparing to buy from overseas because of the impending shortage and rising prices. Government officials are debating whether to reduce or eliminate a 40% import tax on wheat to assist flour millers in particular regions in importing grain, according to persons familiar with the topic who asked not to be identified because the discussions are private. Bloomberg reported.
An email seeking a response from the finance ministry was not returned. The food and commerce ministries’ spokespersons declined to comment.
‘Given that much of the war risk premium has been removed from global wheat prices,’ said Sonal Varma, an economist at Nomura Holdings Inc., ‘India can look at expanding its local wheat supply through increased imports. However, because domestic wholesale wheat prices are lower than worldwide prices, lowering import taxes will also be required to make it a viable choice.’
Wheat prices in Chicago reached around $14 per bushel in early March, as the European war threatened a key source of global exports. Prices have now given up all of their gains as supply concerns have subsided. They’re back below $8, which relieves some of the strain on poor economies that are trying to feed their people.
Despite being the world’s second-largest producer of wheat, India has never been a significant exporter. It also never imported much, with outside imports accounting for approximately 0.02% of yearly production. The country was mostly self-sufficient.
Authorities now anticipate a harvest of roughly 107 million tonnes in 2021-22, down from 111 million in February. Traders and flour millers predict 98 million to 102 million tonnes, which may be too optimistic.
According to the food ministry, government purchases of wheat for the world’s largest food aid program are likely to be less than half of what they were last year. This prompted authorities in certain states to distribute additional rice while also restricting exports of wheat flour and other items.
Since April, consumer wheat inflation has remained above 9% year on year, peaking at 11.7% in July. According to official data, wholesale prices increased by 13.6% in July. This is causing problems for the central bank, which is attempting to bring overall inflation, which is currently near 7%, back within its 6% objective.
Wheat is India’s most important winter crop, with planting taking place in October and November and harvesting taking place in March and April. Concerns have also been raised concerning its rice output, which may provide the next challenge to world food security.
‘Cereal inflation is a concern due to poor paddy sowing,’ Sameer Narang, an analyst in Mumbai, said. He believes that growing food prices will continue for some time.
(Inputs from News Agency)