Critics say a ban on wheat exports would disrupt market channels and prove to be anti-farmer. But a look at the demand-supply dynamics will show absent the ban, the country would have faced a shortage of the grain for even PDS distribution.
The ban on wheat exports — except on the shipments under government-to-government arrangements for food security purpose – imposed last week was necessitated by a drop in the rabi production of the cereal, relatively low level of stocks with the Food Corporation of India (FCI) and high market prices of the cereal.
The ‘opening stock’ with the government (FCI) stood at 19 MT on April 1, 2022, which was much higher than the buffer requirement of 7.5 MT. At 30 MT, the FCI stocks (post procurement) was, however, a five-year low. This prompted the Centre to replace wheat with rice in a major way under NFSA & PMGKAY schemes.
Trade officials estimate production this year to be in the range of just 96-98 MT (as against initial estimate of 111 MT, the lowest in the last five years. With the annual domestic consumption estimated at 86-88 MT, the stock situation is getting tight.
While 17 MT of wheat is still required for both the schemes, there are questions about the quality about 12.5 MT of FCI’s wheat.
About 4.5 MT of wheat for which contracts have been signed will still be exported, against a record 7 MT last year.