The Indian wheat flour-milling industry is currently facing conflicting concerns surrounding the upcoming wheat harvest. In response to the lowest domestic inventories in more than a decade and soaring prices, the industry has called on the government to consider reducing or abolishing the wheat import duty. This move is seen as a way to boost domestic inventories, reduce price volatility, and control food inflation driven by supply uncertainty.
Wheat plays a crucial role in India’s economy, affecting food security, political stability, farmer livelihoods, and inflation levels. As one of the largest producers and consumers of wheat globally, India’s policy decisions regarding wheat production, pricing, and distribution have significant implications. While global wheat prices have decreased by more than 2 percent since the beginning of the year, Indian wheat prices have reached near-record highs.
The Roller Flour Millers Federation of India (RFMFI) has proposed a reduction in the current 40 percent duty to a range of 5-10 percent. This reduction is expected to benefit flour millers in South India and improve wheat availability across the country. The duty on wheat imports was increased from 30 percent to 40 percent in April 2019 and has remained at that level since.
RFMFI President Navneet Chitlangia emphasized the importance of reassessing the need for a duty post-harvest and government procurement. He highlighted the potential benefits of importing 2-3 million metric tonnes of wheat to dispel the narrative of India having a low crop size. RFMFI Vice President Rohit Khaitan echoed these sentiments, expressing concerns about the delicate balance between production and supply in the current market.
India’s farmers are facing challenges with the upcoming wheat harvest due to above-average temperatures that threaten crop yields. The Indian Meteorological Department has forecasted higher-than-normal temperatures for March and April, particularly in wheat-growing states like Punjab, Haryana, Uttar Pradesh, and Madhya Pradesh. These conditions present a risk of reduced production and quality due to premature increases in temperatures.
If production fails to meet the projected demand for the upcoming year, the government may need to reconsider its import policies to ensure domestic food security. The dwindling wheat stocks and rising prices indicate the potential for another shortfall, which could have severe consequences for domestic food inflation. Authorities may need to lower or eliminate the 40 percent import tax to allow private traders to import wheat from overseas markets.
In addition to wheat, other winter crops like chickpeas and canola may also be affected by rising temperatures, further straining the domestic food supply and rural economy. Decreased oilseed yields and chickpea output could lead to higher prices for key food items, impacting the overall food security situation in the country.
Despite an increase in wheat planting area compared to the previous season, adverse weather conditions are expected to impact yield expectations. Various forecasts from industry experts and analysts suggest a range of production estimates, with final numbers likely to be lower than initial projections. The government’s optimistic estimates may require revision based on the evolving weather conditions and production challenges.
In conclusion, the Indian wheat flour-milling industry is calling for government intervention to address the challenges posed by the upcoming wheat harvest. By considering a reduction in wheat import duties and implementing strategic measures to stabilize domestic inventories, the industry aims to mitigate supply uncertainty, control price volatility, and ensure food security for the nation. Collaboration between industry stakeholders and policymakers will be crucial in navigating the complexities of the current market situation and safeguarding the interests of all stakeholders involved.
