{"id":9597,"date":"2022-05-19T00:00:00","date_gmt":"2022-05-19T00:00:00","guid":{"rendered":"https:\/\/www.nextias.com\/current_affairs\/uncategorized\/19-05-2022\/wheat-crisis-in-india\/"},"modified":"2022-05-19T00:00:00","modified_gmt":"2022-05-19T00:00:00","slug":"wheat-crisis-in-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/editorial-analysis\/19-05-2022\/wheat-crisis-in-india","title":{"rendered":"Wheat crisis In India"},"content":{"rendered":"

In Context\u00a0<\/u><\/strong><\/span><\/span><\/span><\/h2>\n

Recently, India banned wheat exports with immediate effect as part of measures to control rising domestic prices.<\/span><\/span><\/span><\/p>\n

\n\n\n\n
\n

Previous crisis\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n

    \n
  • Procurement in 2006-07 (April-March) at 9.23 MMT was far below the <\/span><\/span><\/span>requirement<\/strong><\/span><\/span><\/span>.<\/span><\/span><\/span><\/li>\n
  • The <\/span><\/span><\/span>buffer stocks were drawn down<\/strong><\/span><\/span><\/span> by<\/span><\/span><\/span> 2 MMT<\/strong><\/span><\/span><\/span>, a cardinal error in <\/span><\/span><\/span>food management.\u00a0<\/strong><\/span><\/span><\/span><\/li>\n
  • The <\/span><\/span><\/span>stock position<\/strong><\/span><\/span><\/span> at the <\/span><\/span><\/span>end of a poor procurement season<\/strong><\/span><\/span><\/span> had put the government in a tight spot.<\/span><\/span><\/span><\/li>\n
  • What led to this situation?<\/strong><\/span><\/span><\/span>\u00a0<\/span><\/span><\/span>\n
      \n
    • The <\/span><\/span><\/span>central pool <\/strong><\/span><\/span><\/span>had been <\/span><\/span><\/span>carrying large stocks<\/strong><\/span><\/span><\/span> and there was <\/span><\/span><\/span>wide criticism.<\/strong><\/span><\/span><\/span>\n
        \n
      • The government had, after due consideration, decided to liquidate some <\/span><\/span><\/span>stocks with the FCI for export.\u00a0<\/strong><\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
      • The <\/span><\/span><\/span>drawdown on public stock<\/strong><\/span><\/span><\/span>s without<\/span><\/span><\/span> reviewing the production<\/strong><\/span><\/span><\/span> and <\/span><\/span><\/span>stock position every quarter was ill-planned<\/strong><\/span><\/span><\/span>.\u00a0<\/span><\/span><\/span><\/li>\n
      • Not <\/span><\/span><\/span>estimating the impact of climate change<\/strong><\/span><\/span><\/span> (high temperatures) on production\u00a0 grain formation and grain size\/weight\u00a0 turned out to be critical.<\/span><\/span><\/span><\/li>\n
      • No official data existed on I<\/span><\/span><\/span>ndia\u2019s privately-held stocks of grains<\/strong><\/span><\/span><\/span>.<\/span><\/span><\/span>\n
          \n
        • The <\/span><\/span><\/span>government depended<\/strong><\/span><\/span><\/span> on only production and public stock data to make policy decisions, <\/span><\/span><\/span>ignoring the importance of private stocks in the market.\u00a0<\/strong><\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

          Present Situation\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n

            \n
          • India is the <\/span><\/span><\/span>second-largest producer of wheat in the world,<\/strong><\/span><\/span><\/span> with China being the <\/span><\/span><\/span>top producer and Russia the third-largest<\/strong><\/span><\/span><\/span>.\u00a0<\/span><\/span><\/span><\/li>\n
          • After five straight years of a bumper wheat output, India has had to revise d<\/span><\/span><\/span>ownwards its estimated production.\u00a0<\/strong><\/span><\/span><\/span>\n
              \n
            • The <\/span><\/span><\/span>revised crop size is reported as 102 mmt<\/strong><\/span><\/span><\/span>.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

              Why has wheat production dwindled?<\/u><\/strong><\/span><\/span><\/span><\/p>\n

                \n
              • Unprecedented heat waves <\/strong><\/span><\/span><\/span>across the north, west and central parts of the country have caused substantial loss to the yield this year.\u00a0<\/span><\/span><\/span>\n
                  \n
                • The \u201cearly summer\u201d in states like Punjab, Haryana and Uttar Pradesh has also affected crop yields.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
                • Lower output coupled with strong export demand<\/strong><\/span><\/span><\/span> then pushed local prices higher, often above the government’s fixed procurement price.\u00a0<\/span><\/span><\/span>\n
                    \n
                  • That <\/span><\/span><\/span>prompted farmers<\/strong><\/span><\/span><\/span> to sell wheat privately instead of to the state, whose purchases to <\/span><\/span><\/span>run welfare schemes <\/strong><\/span><\/span><\/span>slumped due to tight supplies.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n

                    Challenges faced by\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n

                      \n
                    • World\u00a0<\/strong><\/span><\/span><\/span>\n
                        \n
                      • Russia and Ukraine<\/strong><\/span><\/span><\/span> jointly account for about<\/span><\/span><\/span> 30% of global wheat exports.\u00a0<\/strong><\/span><\/span><\/span><\/li>\n
                      • Ukraine’s exports are severely hampered because the war has forced it to close its ports, while Russia’s exports have been hit by Western sanctions.\u00a0<\/span><\/span><\/span>\n
                          \n
                        • Asian importers are likely to be in deep trouble.\u00a0<\/span><\/span><\/span><\/li>\n
                        • India was the Ukraine\/Russia alternative, especially for feed wheat.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
                        • India’s ban could <\/span><\/span><\/span>drive global prices to new peaks given<\/strong><\/span><\/span><\/span> already tight supply, <\/span><\/span><\/span>hitting poor consumers in Asia and Africa<\/strong><\/span><\/span><\/span> particularly hard.<\/span><\/span><\/span><\/li>\n
                        • Agriculture ministers from the G7 <\/strong><\/span><\/span><\/span>industrialised nations immediately condemned India’s decision<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
                            \n
                          • India\u00a0<\/strong><\/span><\/span><\/span><\/li>\n<\/ul>\n
                              \n
                            • The<\/span><\/span><\/span> government wheat procurement has dipped<\/strong><\/span><\/span><\/span>, concerns are being raised about the stability of prices in the country and the availability of grain for internal consumption.<\/span><\/span><\/span><\/li>\n
                            • Farmers across north Indian states are facing a<\/span><\/span><\/span> shortage of dry fodder due <\/strong><\/span><\/span><\/span>to the wheat crisis.<\/span><\/span><\/span><\/li>\n<\/ul>\n

                              Way Ahead\u00a0<\/u><\/strong><\/span><\/span><\/span><\/p>\n

                                \n
                              • Set up systems to get reliable and timely estimates <\/strong><\/span><\/span><\/span>of crops.\u00a0<\/span><\/span><\/span><\/li>\n
                              • The<\/span><\/span><\/span> National Crop Forecasting system<\/strong><\/span><\/span><\/span> including \u201c<\/span><\/span><\/span>FASAL soft\u201d<\/strong><\/span><\/span><\/span> will have to be reset.\u00a0<\/span><\/span><\/span><\/li>\n
                              • The <\/span><\/span><\/span>much-hyped Drone-Artificial Intelligence- Blockchain technologies<\/strong><\/span><\/span><\/span> should be deployed to :\u00a0<\/span><\/span><\/span>\n
                                  \n
                                • Prepare a correct estimate of the crop well in time, for the government to plan and act ahead of any crisis.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
                                • R<\/span><\/span><\/span>eliable price data has always been <\/strong><\/span><\/span><\/span>a missing link in policy planning.<\/span><\/span><\/span>\n
                                    \n
                                  • Mandatory reporting of price (not just the APMC price data) of all large (limits can be defined) transactions are a must.\u00a0<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
                                  • The <\/span><\/span><\/span>government should be aware of the quantum <\/strong><\/span><\/span><\/span>of private stocks, preferably in <\/span><\/span><\/span>anonymised, aggregated formats<\/strong><\/span><\/span><\/span>.<\/span><\/span><\/span>\n
                                      \n
                                    • This <\/span><\/span><\/span>needs legal backing<\/strong><\/span><\/span><\/span>. A provision to <\/span><\/span><\/span>mandate the submission<\/strong><\/span><\/span><\/span> of <\/span><\/span><\/span>anonymised stock data<\/strong><\/span><\/span><\/span> from all warehouses should be put in place.<\/span><\/span><\/span><\/li>\n<\/ul>\n<\/li>\n
                                    • A robust system (drones, satellites, ground data) to monitor weather conditions like temperature, moisture stress, etc needs to be put in place immediately with a <\/span><\/span><\/span>focus on key crops and major growing regions<\/strong><\/span><\/span><\/span>.\u00a0<\/span><\/span><\/span><\/li>\n
                                    • The government has to ensure that the market price for the domestic consumer is not determined by private players .<\/span><\/span><\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                                      In Context\u00a0 Recently, India banned wheat exports with immediate effect as part of measures to control rising domestic prices. Previous crisis\u00a0 Procurement in 2006-07 (April-March) at 9.23 MMT was far below the requirement. The buffer stocks were drawn down by 2 MMT, a cardinal error in food management.\u00a0 The stock position at the end of […]<\/p>\n","protected":false},"author":1,"featured_media":9598,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[22],"tags":[57,30],"class_list":["post-9597","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editorial-analysis","tag-effect-of-policies-politics-of-developed-developing-countries-on-indias-interests","tag-gs-2"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2023\/07\/7515051Screenshot_6.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/9597","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=9597"}],"version-history":[{"count":0,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/9597\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/9598"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=9597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=9597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=9597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}