Government needs to factor in that both production and procurement are likely to be below expectations

Context: India isn’t going to harvest a bumper wheat crop this time.

What is the situation wrt wheat production and procurement this year?

The Agriculture ministry made an all-time high output estimate of 111.32 million tonnes (mt) in mid-February, when the crop looked good, thanks to surplus rains and an extended winter.

Most field reports point to yields being about a fifth lower compared to last year even in Punjab and Haryana, where farmers mostly plant wheat before November 15.

It could be worse in Uttar Pradesh and Bihar, where sowing stretches till late-December, making the crop still more vulnerable to the havoc wreaked by the hottest March in India’s recorded history.

Procurement situation in India

Government agencies bought 43.34 mt of wheat last year. Available trends for the new marketing season suggest achieving 30 mt and some even suggest 25 mt.

Together with 19 mt of opening stocks on April 1, this can cover the 26 mt-odd requirement of the public distribution system plus another 11 mt under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) free-grain scheme.

That would leave year-end stocks at 7-12 mt, just around the buffer norm of 7.46 mt.

What are the reasons behind an expected shortfall in production of wheat?

A sudden spike in temperatures and the mercury touching 40oC levels in most wheat-growing areas before the Mar-end.

The early onset of summer, with practically no spring, impacted the crop at the time of grain-filling: Day temperatures should ideally be in the early-30 degrees range during this “dough” stage, when the wheat kernel is accumulating starch, protein and other dry matter.

The heat stress post mid-March resulted in premature ripening and shriveling of grains.

What steps can the government take in case of a shortfall?

If production and procurement do turn out much below expectations, there are two things the government can do.

The first is cut wheat and correspondingly raise rice allocations under the PMGKAY. Some additional wheat may, in fact, be necessary for undertaking open market sales, especially in the latter half of the fiscal.

The second thing is to keep a check on exports. Indian wheat is highly competitive in the global market today, but govt should let these exports happen through the private trade in the natural course. It mustn’t push beyond a point, leave alone exporting from its stocks.

The worst thing would be to talk about “feeding the world” today and then, all of a sudden, announce a ban on exports.

Source: This post is based on the article “Government needs to factor in that both production and procurement are likely to be below expectations” published in The Indian Express on 22nd Apr 22.

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