Be it intense rains that led to floods or unprecedented heat waves, we have all been impacted by the effects of climate change this year. Therefore, it was only a matter of time before we saw the effect of climate change on our food supply. It’s estimated that the heat waves in March and April have reduced India’s wheat crop yield by 10 to 30% this year. Combine that with the ongoing Russia-Ukraine political crisis, procurement issues, and inflation, we have good reason behind the wheat export ban. Let’s take a deeper look at the forces that led to the wheat export ban.

Know your wheat

India is the second-largest wheat-producing country in the world, the first being China. Over the last two decades, India has produced 12.5% of the world’s wheat. Wheat is one of the major food crops in India and it is predominantly cultivated in the Northern regions. There is an estimated 29.8 million hectares of land under wheat cultivation in India. Wheat is a rabi crop that grows well in sandy or clay loam.

For most Indian households, wheat flour or ‘atta’ is a common pantry staple. Technically speaking, the main varieties of wheat grown in India are VL-832,VL-804, HS-365, HS-240 , HD2687,WH-147, WH-542, PBW-343, WH-896(d), PDW-233(d), UP-2338, PBW-502, Shresth (HD 2687), Aditya (HD 2781), HW-2044, HW-1085, NP-200(di), HW-741. However, the average user is more familiar with these wheat varieties:

• Khapli/Samba/Emmer/Diabetic wheat: This variety is filled with dietary fibre and can lower the lipid and glucose levels in the blood.
• Sharbati wheat: This golden-wheat variety comes from the Sehore region of Madhya Pradesh. It has a higher protein content compared to other varieties and a nutty flavour.
• Bread wheat: This is the most common variety of wheat produced worldwide. India has its own variation known as Indian dwarf wheat which produces round, small grains with a mild flavour.
• Durum wheat: This wheat variety has become popular, thanks to our consumption of pasta. It comprises of coarse grains. It also contains a high amount of gluten but less starch compared to bread wheat.

Wheat-producing states in India

The major wheat-producing states in India are Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Rajasthan, Bihar and Gujarat.

India’s wheat production has been steadily rising since the 1960s. However, there has been some noticeably high output over the last decade. In 2015, India’s wheat production stood at 86527 thousand tons. In 2017, it jumped to 98510 thousand tons and in 2019, the number crossed over to 103600 thousand tons. It has been steadily increasing since then. Despite the heat waves this year, and the dip in production, the output from the wheat producing states in India stood at 108500 thousand tons.

Indian wheat export scene 2022

As mentioned above, India is the second-largest producer of wheat in the world, the first being China. But India keeps most of its wheat for domestic consumption, since it’s a staple part of the Indian diet. The third biggest producer of wheat in the world is Russia. But unlike India, Russia also exports its wheat. Ukraine too is a huge producer and exporter of wheat. Therefore, the political tensions between Ukraine and Russia have had an adverse affect on the world’s wheat supply.

India exports wheat predominantly to the neighbouring countries and to Gulf regions. In the recent years, we have started exporting to Indonesia, the Philippines and South Korea. However, the biggest consumers are nearby countries. In 2020-21, India exported wheat mainly to Bangladesh, Nepal, UAE, Sri Lanka and Yemen Republic. In 2022, Bangladesh bought 60% of India’s wheat, followed by Sri Lanka at 8.1%, and UAE at 7.3%.

Bangladesh has been the biggest importer of Indian wheat. In 2020-21, Bangladesh imported wheat from India (23.9%), Canada (22.8 %), Russia (20.7 %) and Ukraine (17.1 %). Due to the ongoing war between Russia and Ukraine, Bangladesh has to look towards India for its wheat supply. India was all set to increase its wheat exports after increasing market share in 2021-22, especially since India was graced with bumper wheat crops last year. However, the recent heat waves led to a decline in wheat production. This pushed the Indian government to focus more on meeting the country’s food security needs and keeping the food prices in check.

In May 13 2022, wheat export ban came into effect. As per the rules put down in May, wheat exports would continue in order to support the needs of neighbouring and other vulnerable developing countries as per the request of concerned governments. However, according to a statement from the Directorate General of Foreign Trade on July 6th, the revised policy stated that all exporters must now acquire prior approval from the Inter-Ministerial Committee on Wheat Export before initiating any outbound shipment.

The wheat export ban has thrown a spanner in the works for wheat exporters who had prior agreements with foreign purchasers. Similarly, the farmers who supply wheat have been hit with low produce owing to the heat waves and no chance to take advantage of the global high prices of wheat.

Procurement

India has one of the largest wheat stocks globally(282.7 lakh tonnes as of February 2022), but it is maintained predominantly for domestic consumption. India’s wheat export ban has led to soaring wheat prices globally, but it has also helped stabilised the situation in India. However, procurement has not been up to par this year.

As per the latest official data, government agencies have procured 0.33 million tons of wheat in the recently concluded 2022-23 rabi marketing season (as compared to the 5.64 million tons procured last year). The plan is to procure 6 million tons of wheat in the 2022-23 marketing year. Two reasons behind the low procurement levels are low yields owing to heat waves, and low supply of harvested wheat. This low supply is due to the fact that farmers sold their stocks at higher rates in the open market (Rs 2,050 to Rs 2,200 per quintal vs the MSP of Rs 2015 per quintal).

Low procurement has forced the state government to take measures like introducing mobile centres which move from village to village to buy wheat directly from farmers. Currently there are 5,700 such mobile procurement centres.

The heat wave effect

Heat waves reduced India’s wheat crop yield this year by 10 to 30%. Though we have enough stocks in reserve, this decline in production was completely unexpected, especially after last years bumper crop yield.

Wheat harvests have three phases – sowing, flowering and maturing. Exposure to high temperature at any of these phases can affect the wheat yield and quality. This year, the heat waves hit at the final phase which is critical for harvest.

India has faced low food productivity owing to extreme heat before too. According to a 2019 study, heatwaves in 2010 impacted the crop yields, decreasing it by 4.9 %, 4.1 % and 3.5 % in Punjab, Haryana and Uttar Pradesh respectively. However, the 2022 heat waves were particularly vicious and started at the beginning of March. But that’s not all. The winter prior to this was short too and wheat requires winters for growth. Therefore, in March, wheat crops did not get a chance to ripen properly and the quality of grain was affected. This uneven ripening forced farmers to sift in order to sort separate the ripened grains from the rest, causing unnecessary wastage. .

According to the latest study by Intergovernmental Panel on Climate Change (IPCC), the rise in global average temperature could pose a threat to agriculture in India. The Global Food Policy Report 2022 by the International Food Policy Research Institute has warned that climate change can lead to a decline in agricultural production in India. Heat waves are a direct result of climate change. As per a 2016 government study on the long term impact of climate change on agriculture in India, it was forecast that a 2.5 degrees Celsius to 4.9 degrees Celsius temperature rise has the potential to reduce wheat yields by 41-52 percent.

Closer to home, the Indian Council of Agricultural Research (ICAR) did a vulnerability assessment of 573 rural districts to climate change. The assessment projected that the temperature can increase by 1 to 1.3 degrees Celsius in 256 districts and by 1.3 to 1.6 degrees Celsius in 157 districts, for the period 2020-2049. Wheat cultivation in these areas would be affected for sure.

There aren’t sufficient studies on how to manage such situations. A simulation model (InfoCrop) and field experiment comes closest to showing the impact of chronic heat stress on wheat productivity. The results showed that long term heat stress will reduce wheat yields by 11.1% in 2050. Early sowing (advancing the sowing date by 10 days from recommended sowing date), additional use of nitrogen fertilizer, and an additional irrigation at grain filling stage were found to be the best options for increasing wheat yields.

What lies ahead?

The effects of climate change are an urgent issue since it could lead to the decline in wheat and food production in general over the coming years. The political situation between Russia and Ukraine does not look like it will cease any time soon. However, after months of negotiations, Ukraine and Russia agreed to allow wheat exports from Black Sea ports. However, it may be a while before things resume as normal. Owing to these external factors, it is fair to say that the wheat export ban in India could continue indefinitely.

We hope this article shed light on the current wheat inflation.  We would like to hear your opinions in the comment section. Don’t forget to like, share and follow the Bijak blog for weekly articles on Indian agri trade. Bijak is India’s most trusted agri trading platform. It brings together agri traders from across India to trade in over 200+ commodities. You can get a glimpse of the action on Bijak Mandi and download the app to get started with trading right away.

Sources: Types Of Wheat, Wheat Graph, APEDA, Global Wheat Production, Money Control, Business Standard, Inventiva, Wionews, India Today, Weather Woes, Financial Express, Mongabay, The Readers Time, CNN, Drishtiias, The Print