India staring at grave foodgrain crisis in coming months
Adverse climate conditions have hit the production of both wheat and rice, and their prices are soaring across the country
The foodgrain crisis is set to further aggravate in India. Earlier, heatwave conditions had impacted the wheat crop, leading to reduced production and procurement – prompting the Centre to enforce a wheat export ban on May 13 – and now, deficit rainfall has caused a decline in rice cultivation by about 13 per cent so far.
The shrinkage in rice cultivation area to the smallest in about three years is ominous at a time when the country is grappling with soaring food prices and inflation. A large part of the country, including West Bengal and Uttar Pradesh, which account for a quarter of India’s rice production, has been hit by the deficit in rainfall.
Any decline in rice production would lead to a setback in the availability of foodgrain in the country at affordable prices, both in India and the world, since India is presently the biggest exporter of rice, accounting for about 40 per cent of the global rice trade.
It should be noted that the government’s wheat procurement till May 14, just after the wheat export ban on May 13, reached 18 million tonnes, which was 36.7 million tonne lower compared to the corresponding period of the previous year. The target was then revised to 19.5 million tonnes from 44.4 million tonne for the year 2022-23. The procurement was down by 53 per cent to 182 lakh tonnes by May 24.
Total wheat production was officially projected in May to be 106.41 million tonnes, registering a 4.41 per cent decline. It triggered the price of wheat to reach a record high in India despite the export ban, selling at Rs 23,547 per tonne in the local domestic market by July end, up by about 12 per cent compared to May, just before the export ban was imposed.
However, the Foreign Agriculture Service (FAS) of the US government has lowered its estimates for the Indian market year 2022-23 (April-March) wheat production forecast to 99 million metric tonnes (MMT) compared to the pre-harvest forecast of 110 MMT. Subsequently, the wheat export forecast was lowered to 6 MMT and ending stocks to 8.5 MMT due to tightening of supplies.
The Government of India has already lowered the allocation of wheat, replacing it with additional rice volume, under its various domestic food security programmes from May 2022 onwards. It has increased the domestic rice consumption. For the Indian market year 2021-2022, FAS raised rice consumption estimate to 109.5 MMT and lowered ending stocks to 36 MMT.
The FAS estimate about production of wheat is much lower at 99 MMT as against the estimates of the Government of India at 106.41 MMT. Even the global trading firms are of the view that the actual wheat production might have been around 95 MMT, even less than the FAS estimate. No one believes in the Government of India’s estimates.
India was the world’s second-largest wheat producer in 2021, with a production of 109.59 MMT.
This implies that the decline in rice cultivation would reduce its production at a time when consumption of rice in India has been on the rise. Additionally, the lack of availability of wheat at affordable prices has further increased rice consumption in the country.
The concern is also reflected in rise in the price of rice in the country. The prices of some varieties have increased by more than 10 per cent in the past two weeks in the major rice growing states in the country such as West Bengal, Odisha and Chhattisgarh.
The decline in rice production in India will also impact the export prices which are likely to climb to $400 a tonne by September. As of now, it is about $365 on a free-on-board basis.
Much will depend on how the monsoon will progress in the remaining Kharif season. Though there is still time to continue with planting of rice, it would only make up for only some of the shortfall, because sowing rarely happens in India after mid-July. However, there is still hope because of normal rain forecast for the month of August and September.
Food prices in India have been increasing fast and inflation has already crossed the Reserve Bank of India’s (RBI’s) tolerance limit of 6 per cent. CPI inflation in April was 7.79 per cent followed by 7.04 per cent in May, and 7.03 per cent in June. As for food inflation, it was 7.92 per cent in May, and 6.73 per cent in June.
Union Finance Minister Nirmala Sitharaman said in Rajya Sabha on August 3 that the Centre and RBI are trying to keep inflation under the RBI’s tolerance limit of 6 per cent. “We have a 2-6 per cent inflation band but we are at 7 per cent with some efforts,” she said, indicating that efforts to keep inflation within tolerable limits was failing.
In this backdrop, India urgently needs to ensure food security for its people who are reeling under rampant unemployment, unaffordable price rise and intolerable inflation. Food security must be ensured at household levels and the slogan of self-sufficiency of the country at national level would do no good to the common people belonging to the middle class and the poor.
Millions of people, especially women and children, are already suffering from malnutrition and related problems.
Views are personal