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Journalism of Courage
The next 15-20 days could decide how much wheat India is going to produce — but maybe not the course of food inflation.
Currently, the crop in Punjab, Haryana and Rajasthan, largely sown during the first half of November, is in the ‘milk to early dough’ stage. This is when the kernels have started forming and taking in stored nutrients from the stem and leaves. The wheat sown late — from November-end through December in much of Uttar Pradesh — has completed pollination or is still in the ‘heading’ stage, where the baali (earheads bearing the flowers and eventually grain) are emerging from the tillers.
But whether sown early or late, the wheat crop needs a certain minimum days for grain development and filling. “This stage (which begins when pollination and fertilisation ends) should ideally last 40-45 days,” said Rajbir Yadav, principal scientist at the Indian Agricultural Research Institute in New Delhi.
The longer the crop is in the field now, the more starch and proteins the grains will accumulate, and higher the yields. That, in turn, depends on temperature; grain-filling will happen so long as it remains within 35 degrees Celsius.
“The maximum shouldn’t cross 37 degrees before March-end,” noted Yadav. By then, the ‘hard dough’ period — when the grains have attained physiological maturity in terms of dry weight with 25-30% moisture content — would be over. The crop is ready for harvest once the grains have ripened and moisture levels reduced to 12-13% by rising temperatures. In Madhya Pradesh and most of western India, the grain drying and ripening phase has already been reached.
Last year, maximum temperatures breached the 35-degree mark in the northern plains by mid-March and 40 degrees before the month-end. The mercury spike during the milk and dough development stages forced early maturing, impacting yields.
While official data showed a marginal dip in the country’s wheat output, from 109.59 million tonnes (mt) in 2020-21 to 107.74 mt in 2021-22, trade estimates pegged production at only 95-100 mt. This was partly borne out by the government’s own procurement plunging to 18.79 mt, from the previous year’s 43.34 mt, and open market prices soaring even after a ban imposed on exports.
Record February temperatures this time, similar to last year’s hottest-ever March, raised worries over the current crop too. However, March 2023 has so far seen the maximums hovering at 30-33 degrees. “The crop looks very fine for now,” added Yadav. He also ruled out yield losses from the high February temperatures: “That would, if anything, have preponed heading by 4-5 days and given more time for grain-filling”.
The big difference between now and last year, though, is international prices.
The UN Food and Agriculture Organization’s (FAO) food price index hit a historic high of 159.7 points in March 2022, the month that followed Russia’s invasion of Ukraine. But since then, the FAO index — a weighted average of world prices of a basket of food commodities over a base period value, taken at 100 for 2014-16 — has fallen every month to touch 129.8 points in February 2023. Its major component indices, including cereals and vegetable oils, have also declined, the latter more so (see chart).
The failure of India’s 2021-22 wheat crop came at a time when global commodity prices were on fire. The domestic weather shocks — from the March heat wave as well as excess rainfall in the preceding months — combined with the war-induced supply disruptions to unleash significant food inflation pressures.
To the extent that world food prices have come off their peaks, it makes imports all the more feasible to bridge domestic production shortfalls. This wasn’t the case a year ago.
Take wheat prices at the Chicago Board of Trade futures exchange. These, after scaling a record $13.64 per bushel last March, have more than halved to $6.79/bushel or below $250 a tonne (one bushel=27.216 kg). That works out to about Rs 2,050 per quintal, less than the government’s minimum support price (MSP) of Rs 2,125 for the new crop.
The US Department of Agriculture has projected all-time-high exports of wheat by Russia (43.5 mt), Australia (30 mt) and Kazakhstan (10.5 mt) in the marketing year ending June 2023. These, plus increased volumes by Canada (from 15 mt to 25 mt), will more than compensate for lower shipments from war-torn Ukraine (18.8 mt to 13.5 mt) and drought-affected Argentina (17.7 mt to 6.5 mt).
Like with wheat, palm oil prices in Malaysia have retreated from an unprecedented 7,268 ringgit-per-tonne in March 2022 to just over 4,000-ringgit levels a year later. Again, record production and exports are expected of palm oil from Indonesia, soyabean from Brazil and sunflower from Russia, alongside increased rapeseed supplies from Canada and the European Union. These would offset reduced output of soyabean from Argentina and the US, and of sunflower from Ukraine.
Deficit to surplus
Simply put, the world has overcome, if not shrugged off, the effects of the Ukraine war. The supply situation has changed from deficit to, perhaps, surplus in most agri-commodities. That’s reflected in global prices, including of urea and di-ammonium phosphate. Their fall from recent peaks is quite steep (see table).
All this has implications for food inflation back home.
A case in point is mustard. Its prices are ruling at Rs 4,800-5,000 per quintal in most mandis, as against the MSP of Rs 5,450. The fall — the oilseed traded well above MSP last year — has come despite reports of frost damage to the crop from severe cold wave conditions in mid-January. Vivek Puri, managing director of Puri Oil Mills Ltd that markets ‘P Mark’ mustard oil, pegged this year’s crop at 10.6-11 mt. That’s down from the initially estimated 11-11.5 mt.
Clearly, even if domestic production — be it of mustard or wheat — takes a hit, the consequences for food inflation may not be as bad as last year. The reason: the world has more grain and oil than before.
