Why India imports wheat...despite record production

Despite a record harvest of 112.5 million metric tonnes (MMT), India may end up importing about two MMT of wheat in FY25, forecasts researchers associated with the United States Department of Agriculture (USDA)’s foreign agricultural service (FAS) division.

In the ‘Grain and Feed Annual – 2024’ Santosh K Singh, Senior Agricultural Specialist and Mariano J. Beillard, Senior Regional Agricultural Attaché, USDA attribute the potential increase in wheat imports to steady domestic demand, decline in government-held stocks, and relatively weak global prices.

The researchers forecast the record harvest as they expect timely and record plantings of wheat benefiting from favourable weather conditions from the time of planting through the reproductive growth stages. The researchers expect India’s total domestic demand to be 113.5 MMT for FY25.

"India is heading for a back-to-back record wheat harvest this marketing year (MY25). Favourable weather conditions in the major wheat growing areas are supporting record planting and normal crop growth. Assuming normal weather conditions hold from late March 2024, through the harvest at the end of April, FAS forecasts MY25 wheat production at a record 112.5 MMT from 31.8 million hectares (record), even better than the last year’s record harvest of 110.6 MMT coming from 31.4 million hectares," the US agency researchers report.

On consumption trends, FAS New Delhi forecasts food-seed-industrial (FSI) wheat consumption in MY25 at 107.5 MMT, an increase of 1.2% compared to last year’s estimated consumption. "Despite the MY24 Indian government-held food grain ending stocks estimated to decline below the buffer stock norms, the government will likely continue the pace of its wheat allocations under the food security programmes and the open market sales scheme (OMSS) in the upcoming marketing year out of food inflation concerns," the researchers note.

According to them, India’s FSI wheat consumption in FY24 increased by nearly 4% compared to previous year with the Indian government raising its subsidized wheat allocation for open market sales. The researchers assume that the government is likely to augment its abnormally low wheat opening stocks through aggressive MSP (minimum support price) procurement this season. "With India’s general elections ending by late May, incidentally during the peak MSP procurement season (April-June), the new government is likely to continue with wheat allocation under the various national food security programmes and open market sales scheme out of food inflation concerns. To control domestic prices, the government has the option of increasing domestic supplies through imports on expected weak global wheat prices during the upcoming marketing year," they point out.

Incidentally, the Market Intelligence Report on wheat prepared by the Department of Agriculture and Farmers Welfare, government of India had also estimated India’s wheat production for the season to be 112.02 MMT.