|Introduction: Contextual introduction|
Body: write down opportunities created due to global conflicts and what are the associated challenges in wheat export.
Conclusion: way forward
India is drawing up a strategy to increase the wheat exports in global trade because of the Russia-Ukraine conflict. The two countries account for more than a fourth of the global wheat trade. The demands for wheat are showing up in geographically distant countries. Also, Russia is the world’s largest exporter of fertilizer. The price rise of fertilizers will also create food grain inflation.
Opportunity for India:
- India’s wheat output has consistently exceeded its demand for the past five years. When the last rabi harvest ended in June 2021, with output at 100 million tons, stocks of wheat with the Food Corporation of India (FCI) touched a record high of 60 million tons, two-and-a-half times the buffer norms for July.
- Russia and Ukraine together accounted for nearly 30 per cent of global wheat exports. Moreover, Russia and Ukraine are the world’s largest and fifth-largest exporters of wheat and this supply has been negatively impacted due to their conflict.
- There is demand of wheat in Turkey, Egypt and the Middle East where Russia and Ukraine have long been market leaders.
- Political resolve: Exporting all the surplus stock would push up domestic wheat prices, which would put restrictions on future exports.
- Unreliable partner: Despite being the second-largest producer in the world, India has only 1 per cent share of global wheat exports because in agricultural trade, India has seen as an unreliable trading partner.
- Less competitive: Under WTO commitments, the government could not sell procured grain for commercial gains. The private players buy wheat from the market which itself is released by FCI at MSP. As the MSP rises every year, in years where global prices fall, exports would be difficult.
- Non-price attributes: The role of non-price attributes like food safety, quality, and variety of wheat are perhaps the most important constraint. A recent ICRIER study showed that Indian agriculture produce faces more rejections in key export markets compared to other developing countries.
- Import restriction: This creates political difficulties in trading relations, but may also not be good economics.
Any export commitments must be carefully worked out to ensure that there is a balance between India’s aspirations to be a global leader in wheat export vis-a-vis checkmating food inflation in the domestic market. After all, wheat is the staple food for most Indians and any abnormal price rise will rise a backlash.