An insight into India's wheat sector

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India is the world's second biggest wheat producer (73.2 million tonnes in 1998-99) after China.

 

  • India's wheat production in 1998-99 was 73.2 million tonnes, an 18 per cent increase from 55 million tonnes in 1993-94. The 1998-99 output made India the world's second biggest wheat producer after China. But India has not yet established itself as a regular wheat exporting nation. However, the bumper output in 1998-99 – together with other factors mentioned below – positions India to increase its wheat exports, notwithstanding the fact that production in 1999-2000 is expected to have declined by 2.9 per cent.

  • Demand exists in the international markets for both durum and aestivum varieties of wheat. The durum variety accounts for only 4 per cent of the total world wheat production. Nearly 10-12 million tonnes of durum wheat (valued US$2,600 million) is traded annually worldwide. India is a major durum wheat producer, but almost all the 2.5 million tonnes produced by it is consumed within the domestic market itself).

  • World wheat output in 1998-99 is estimated at 591 million tonnes, i.e., 20 million tonnes less than in 1997-98. In contrast, India produced 8 million tonnes more in 1998-99 compared to 1997-98. This makes international wheat production scenario favourable to India.

  • Another factor favourable to India's wheat export prospects is a drastic decline in the area under wheat cultivation in the United States. Reports indicate that the area under wheat cultivation in the US is at its lowest in 26 years. A dry winter in the region between Morocco and Pakistan has also reduced prospects of a good wheat harvest in that region. This improves India's wheat export prospects.

  • It is not that India has never exported wheat. From 1985-86 to 1988-89, India exported a total of 1.278 million tonnes. But then, exports declined to 11,000 tonnes in 1989-90 and 13,000 tonnes in 1990-91. In 1993-94, the government permitted only 300,000 tonnes of wheat to be exported. This was increased to 1 million tonnes in 1997-98 (it should be noted that the volume of foodgrains allowed to be exported depends on the domestic demand-supply situation. In the environment of trade liberalisation, however, no such control can be expected to be exercised if production is plentiful as in 1998-99).

  • There are several constraints on India's wheat exports. The first is price. The domestic price of Indian durum wheat is around US$160 per tonne (as in early 2000) while the international price varies between US$140-150. In the case of aestivum wheat, the Indian market price is around US$150 per tonne whereas the international price is between US$120-130. Improved agricultural technology is the answer.

  • The second constraint on India's wheat exports is a lack of advanced facilities for procurement, processing, storage and transport of the grain. This provides an opportunity to relevant companies in other countries to export the necessary technology to India.

  • The third constraint relates to a lack of a long term policy on wheat exports. This shortcoming has led to a less-than-ideal quality control over procurement.

  • With the thrust on exports increasing by the day, the shortcomings are bound to be redressed.

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