Opinion Why low stocks of rice, wheat and sugar shouldn’t push India to curb exports

Rice, wheat and sugar are agri-commodities in which India’s production, for much of the last decade and more has been surpassing its consumption requirement. This has resulted in overflowing godowns and the country also turning into a significant exporter. During 2021-22, exports of rice alone were valued at $9.7 billion, with sugar and wheat accounting for $4.6 billion and $2.1 billion respectively. But those surpluses suddenly seem a past story. Public wheat stocks on September 1 were at a six-year-low for this date. Mills will begin the new sugar season from October with carryover stocks that are the lowest in five years. While the rice situation is relatively comfortable, there are questions on the size of the current kharif crop, given deficient monsoon rains in the Gangetic plains and reports of a new virus causing stunting of plants in many parts of Punjab and Haryana. Moreover, low wheat stocks means that much extra pressure on rice to feed the public distribution system.

Not for nothing that the Narendra Modi government is worried, especially with annual consumer food inflation at 7.62 per cent in August and 9.57 per cent for cereals. In mid-May, it completely banned exports of wheat. Last week, it did the same for broken rice, besides slapping a 20 per cent duty on all other non-parboiled non-basmati shipments. Exports of sugar were moved from the “free” to “restricted” list on May 24, with a total quantitative limit of 10 million tonnes (mt) set for the 2021-22 season that was subsequently raised to 11.2 mt. While the new season is to start from next month, the government is yet to announce a quota. According to a report in this newspaper, it may initially allow 5 mt of exports — half of last year’s — and take a call on further quantities after February. Simply put, after the wheat fiasco, where the production loss from the March heatwave was seriously underestimated, it does not want to take a chance in rice and sugar.

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That said, one mustn’t lose sight of the basic fact of the three commodities being prone to structural overproduction, as against occasional supply challenges of the kind now. The case for reducing acreages under them and inducing farmers to plant more oilseeds, pulses and other less water-intensive crops remains as compelling as the need to ensure dietary diversification from calories to protein and micronutrient-rich foods. The Modi government should persist with the policy of conservative minimum support price hikes on paddy, wheat and sugarcane and lift the present curbs on exports sooner than later; if at all, tariffs can be imposed instead of quantitative restrictions. With intelligent stock management, this supply challenge shouldn’t last.