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Senior Advisor

Further news on Indian wheat embargo

This is the latest article ffrom the Business Standard today. Note, exports have been suspended since about the 20th of March but could be reinstated - and there is where their other problems start. Because tariffs and government domestic food aid programs keep internal wheat prices higher than the markets the government must subsidize exports - which is against the WTO agreements for which they are being challenged.


Then there is the internal politics. The storms mentioned were in an area south of the prime wheat areas. But damage to fruits and other crops (and probably including some wheat also) resulted in a spike of peasant farmers committing suicide, an unfortunate but common result in India when it is realized that loan sharks and others will not be repaid and operations will not be possible. The rate of farmer suicides is taken as a sign of the effectiveness of the government bureacracy and elections are looming with the possibility of an opposition win. My interpretation is that the suspension of exports accomplishes three things. Covers up the poor results of exports this year (not even 2 million tns, and a story all its own), assures the population there will be enough food (to counter rumors before the election), and avoid WTO penalties. So, in some ways the storms were a convenient excuse.



"India might suspend of even without achieving the scheduled target of 2 million tonnes due to fears of crop damage from the recent across the country.

"The decision is underway. While the Ministry of Food has already taken final decision in this regards, it will communicate to the public sector grain procurement agency the Food Corporation of India () soon," an informed source said.

India has already accepted bids for 1.40 million tonnes of wheat exports so far this year out of the 2 million tonnes target set by the Food Ministry in August last year. The target was set to be achieved by June 2014 to earn Rs 3,400 crore from wheat exports at an average price of $300 a tonne, similar to last year's realisation. India's wheat export was recorded at over 4 million tonnes last year.

But, because of price fall in global markets, the tenders including PEC and received poor response. Consequently, importers negotiated bid price upto $260 a tonne for some lots. FCI is a facilitator of wheat supply to these public sector grain trading agencies.

Sources said that proper assessment of the crop damage is yet to bedone. Hence, the government decided to suspend wheat exports temporarily. In case of insignificant crop damage, exports can be opened to meet the target, he added. Wheat, a 100 per cent rabi crop, is sown in India between October and December for harvesting between March and May.

Before hailstorms, Karnal (Punjab) -based Wheat Research Institute forecast India's wheat output at 95.6 million tonnes this year compared to 92.46 million tonnes in the previous year. Wheat prices in global markets jumped by $27 to trade currently at $273 a tonne due to fears of supply disruptions from Ukraine, one of the world's largest suppliers on the country's stand-off with Russia.

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Veteran Advisor

Re: Further news on Indian wheat embargo



Thanks for posting this information. It's very interesting. I'm working with some Indian ag journalist to dig further into this wheat export embargo. In the meantime, here is an interview that I shot yesterday (April 10). We just barely hit the surface on wheat production. But, I'm following up with these reporters to get more detailed information on this topic. Thanks for bringing to the discussion group.


Video Interview:  India's wheat hit by hail.



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