Why is India exporting more wheat bad for the country?

A chart showing wheat futures prices in India

The conflict in Ukraine has led to more countries looking to India for their wheat supply.
But production of wheat in India has fallen, primarily due to recent severe heat waves.
This has caused wheat prices in India to soar by up to 20%, which has in turn impacted consumers.

India exporting wheat to more parts of the world is putting upward pressure on its domestic prices.

Before the Russia-Ukraine war broke out, India, the second-largest producer of the foodgrain, only accounted for 1% of global exports. The conflict has now made way for it to sell its surplus wheat stocks.

Several countries queued up for Indian wheat in recent weeks: Turkey recently placed orders for 50,000 tonnes. A month ago, Egypt, the world’s largest importer of Russian and Ukrainian wheat, approved India as a new supplier looking to import a million tonnes.

Amid this spike, production in India has also fallen, primarily due to the severe heat waves in March. On May 4, the Indian government slashed production estimates by 5.7% to 105 million tonnes (MT) from the projected 111.32 MT for the crop year ending June.

These factors have cumulatively caused wheat prices to rise sharply by 15-20% in the country over the past few weeks.

A major staple foodgrain, second only to rice, wheat is consumed across India. It is also a key ingredient of food products like bread, biscuits, rotis, and more. Consumers across the board feel the pinch when its prices rise. And it is bad news for a country that has already seen consumer food price inflation more than double since March 2021.

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose’s impact and contact us to see how you can get involved.

What’s next for India’s wheat exports?

With Russia, the world’s largest wheat exporter, grappling with sanctions, India will become an important alternative source of the foodgrain even more, especially with its improved crop quality.

“Earlier, India was not known for its quality wheat, but India’s wheat is now as good as any high-quality wheat from other major global suppliers, and that’s because of new seed varieties,” Gyanendra Pratap Singh, chief of the Indian Institute of Wheat and Barley Research, told Business Standard. Better farm practices and advanced machines have also helped.

Farmers are rejoicing as selling to private traders instead of the state stockpiler is more lucrative. However, in the long run, becoming a key wheat exporter may involve more perils than perks.

Already, India has entered a slew of new markets like Yemen, Afghanistan, Qatar, and Indonesia. China has, meanwhile, warned of a “worst in history” winter crop. Parts of the US could also see production suffer due to a drought.

If more buyers enter the market, the pressure on India will mount. And if this year’s monsoon is anything like last year’s—poor and patchy—that would spell even more trouble for rising prices.

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