The economic fallout of the Ukraine crisis is showing its impact on Punjab markets. The demand for Indian wheat has shot up in the international market as supplies from Russia and Ukraine, two major producers of the crop, have dried up.
As exporters are buying more wheat from Punjab, the price of of the cereal has gone up to Rs 2,500 per quintal in the open market which for the first time is higher than the minimum support price (MSP) of 2,015 per quintal.
Russia's in normal times exports wheat to the tune of $ 8.14 billion every year while Ukraine accounts for $3.11 billion. Together the two countries accounted for a quarter of world's wheat exports.
Punjab has a production target of 132 lakh metric tonnes this year similar to last year, but FCI officials think that farmers would hold back their produce in order to sell it to traders at a higher price when the current procurement season starts on April 1.
The state agencies are expecting to purchase 10 lakh metric tonnes of wheat less than the production target as the traders would try to sell it in the international market after procuring the produce directly from farmers, an FCI official told Indian Narrative.
Once the fresh wheat produce starts arriving in the 'mandis' next week many foreign players are too expected to jump into the business further increasing the price of wheat. At present, the flour mill owners are making purchases of old wheat stock above the MSP.
With the Punjab wheat going to the international market at a higher rate, the problem of storage will also be eased. The state is likely to promote the private sale of wheat at rates higher than the MSP to help financial and storage issues.
India exports only 1 per cent of its wheat produce. The country has 24 lakh metric tonnes of wheat stored in its godowns as of February 2022.
While India has tended to ship wheat mostly to neighbouring countries such as Bangladesh and to some Middle Eastern markets, exporters are now likely to find buyers across Africa and in other areas of the Middle Eastern region.
India is also in final talks to start wheat shipments to Egypt, the world’s top buyer, while discussions are in progress with countries such as China, Turkey, Bosnia, Sudan, Nigeria and Iran, the commerce ministry said this month.
Wheat exports from India have already shot up more than fourfold to about 6 million tons in the 10 months till January this year compared to the same period of the preceding year, according to government figures.
Also read: Will India emerge as key global player in wheat after sanctions on Russia?
