Given Wheat Demand in the International Market, Can the Government Increase Farmers’ Income?

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The geopolitical tensions in Russia and Ukraine present an excellent opportunity to significantly improve the income of farmers in the country by exporting the “golden grain” – wheat. The big wheat exporters – Russia and Ukraine – are absent from the wheat export market due to the war, and wheat rates are also higher than the MSP offered by the government. The export also allows the government to deliver on the promise it made to the farming community five years ago, which has led to the formation of the BJP government in the center for the second year in a row. Narendra Modi’s government had assured farmers that it would double their income in the next five years, ie 2022. Anju Chaba Agnihotri explains how India can use this Russian invasion of Ukraine to improve farmers’ incomes if they cannot be doubled. Excerpts:

At what price is wheat exported from India?

Experts said that Mundra and Kandla ports were also exporting wheat at a rate of 24,000 to 25,000 per tonne (2,400 to 2,500 per tonne) until a week ago. Both rates are higher than the government-provided MSP for wheat, which is 2,015 rupees per quintal. Experts said there is no way wheat rates will drop to the MSP level offered by the government as there is a great demand for wheat in the international market at the moment and farmers can earn Rs.300-350 more than the state-run MSP.

How high is the demand for wheat on the international market?

According to government reports, India’s export tripled in one year from 2020-21 to 2021-22, and for the current fiscal year, the export target is almost double compared to last year. In 2020-21, the total wheat export of India was over 2.1 million tons, which had already reached 6.6 million tons at the end of February this year and reached 7.1 million tons in March this year (fiscal year 2021-22), when India exported wheat to Bangla Desh. United Arab Emirates, Sri Lanka and others. And the government has forecast wheat export of 12-13 million tons for fiscal year 2022-23. The experts said it could even rise to 21 million tons due to huge wheat demand from the Middle East, Africa and several South Asian countries.

Since Ukraine and Russia exported around 48 million tons of wheat, which accounts for 25% of the world’s total wheat export market, to the Middle East, African countries and others, they are now missing from this market, which increases wheat demand many times over.

What is the estimated wheat production in India this year and what is the government’s wheat sourcing target?

Indian expects to produce about 111 million tons of wheat this season, up from 109 million tons last year. In some states, the wheat harvest has already started this season. The government sourcing target was 44 million tons for MSP, including 13 million tons in the state of Punjab itself, but the government may not even reach this target as the rising international wheat prices are also affecting the rate in the local market and local market, where this is the case they sell the crop even at a slightly higher price of Rs 50 to Rs 100 per quintal more than the MSP, resulting in less government procurement.

How can the Indian government help farmers increase their incomes as they promised five years ago?

If the government links the price it pays farmers to the price at which the wheat is exported, farmers will gain much more, a senior Food Corporation of India (FCI) official said, adding that the government could fetch a higher price to farmers in the international market.

Farmer leader Jagmohan Singh, secretary-general of BKU Dakuanda, said the government should improve its sourcing target by offering higher MSP to farmers, lest they go to the local private actor offering little above MSP and later sell or export the same to the higher one Price. Competitive MSPs by the government will increase farmers’ incomes when input costs increase many-fold, he said.

Farmer leader Sukhdev Singh Kokrikalan of BKU Ugrahan said that only a handful of farmers have the capacity to export their crops themselves and this is where the government can play a big role by buying them at a higher price and exporting them to the needy countries and earning huge foreign exchange which will also improve the income of its farmers, which will also reduce their debt burden. “If farmers had had MSP recommended for their crops, they would not be in debt today,” he stressed, adding that the government must seize this opportunity by exporting farmers’ wheat and getting them a good price.

“The rate of each harvest depends on both the domestic and international market. When prices for a crop are low on the international market, it also had a negative impact on local markets, and now when wheat prices are higher on the international market, it should also benefit farmers here, and the Government plays a big role to help farmers by sourcing more and more to export at competitive prices,” said Prof. Sukhpal Singh, Chief Economist, (Marketing) Punjab Agriculture University (PAU, Ludhiana), adding that with this Farmer incomes will increase and suicide rate will decrease Even following the recommendations of MS Swaminathan and the Ramesh Chand Committee on MSP, taking all factors into account, the wheat MSP would have ranged from Rs. 25.00 to 27.00 per quintal .

In addition, when there is a great demand for it in the international market and the prices are high, a good government should procure a maximum, since it is environmentally friendly crop that can be stored for a long time with minimal cost and gradually exported, said Prof. Sukhpal, adding that the government can export it directly due to the current high demand by saving storage costs.

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