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Supply Chain

Record Wheat Crop, High Stocks To Help India Meet Rising Global Demand

Bumper harvests and overflowing grain bins will help India to meet wheat import needs of the world's top buyers as Russia's Ukraine invasion hits supplies from the Black Sea region, a top government official said.

India, the world's second biggest wheat producer, is prepared to meet any extra demand for wheat from buyers in south Asia and Southeast Asia, and also from countries further afield in Europe, West Asia and North Africa.

Ukraine is a major producer of grains but exports have been disrupted since the Russian invasion in February.

"The Indian market has sufficient stocks, and India is in a comfortable position to meet requests from wheat importing countries," Sudhanshu Pandey, the most senior civil servant at the Ministry of Consumer Affairs, Food and Public Distribution, told Reuters in an interview.

Wheat Harvest

India's new season wheat harvest is underway, with this year's production pegged at a record 111.32 million tonnes - making it the sixth season in a row that the country has produced a surplus.

India needs at least 25 million tonnes of wheat each year to run a food welfare programme.

Last year, the government bought a record 43.34 million tonnes of wheat from domestic farmers, substantially higher than the amount it needs for the welfare programme.

This year government purchases are likely to fall because private traders are offering farmers a higher price for wheat than the government's price of 20,150 rupees ($265.35) a tonne, - leaving a bigger surplus for export.

"We have to meet our own requirement for the PDS and then the rest is available for global exports," Pandey said referring to the public distribution system, or food welfare programme that supplies around 25 millions tonnes of subsidised wheat to the poor.

Read More: Food Prices Surged To New Record High In March: FAO

Pandey said if there is enough wheat for the poor, the Indian government is "happy" to see farmers getting attractive prices from private traders who have been actively buying from growers to meet rising global demand.

Wheat stocks at government warehouses totalled 19 million tonnes on 1 April, he said, significantly higher than a target of 7.46 million tonnes.

Pandey said the government was encouraging wheat exports by asking port and railway authorities to give priority to outbound wheat cargoes.

India's wheat exports hit 7.85 million tonnes in the fiscal year to March, an all-time high and a sharp increase from 2.1 million tonnes in the previous year.

Sugar Surplus

Pandey said India's sugar exports are expected at a record 8.2 million tonnes in the current 2021-22 season, higher than last year's 7.2 million tonnes.

Indian sugar mills have already contracted to export around 7 million tonnes in 2021-22, he said.

Still, India's sugar inventories on 1 October 2022, when the next season begins, are expected at around 7 million tonnes, Pandey said, against 8.2 million tonnes on 1 October 2021.

"This year's (sugar) production is at a record of almost 35 million tonnes, and our domestic requirement is about 26-26.5 million tonnes, so you can very clearly see that we have a surplus from the current year's production. And then we have stocks of 8.2 million tonnes from last year," Pandey said.

Explaining New Delhi's efforts to cut its reliance on expensive vegetable oil imports, Pandey said the long-term solution lies in raising India's domestic output, and the government is working on a plan to encourage farmers to grow more oilseeds.

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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