India is contemplating the possibility of allowing the import of economical wheat from Russia to alleviate the escalating domestic wheat prices before the Lok Sabha elections in March-April 2024. Building on recent electoral successes in agrarian states, the government is considering the import of more than one million metric tonnes (mmt) of cost-effective Russian wheat, potentially reducing the existing 40% import duty by around 15-20%. With the domestic wheat price standing 25% higher than the prescribed rate, two consecutive years of adverse weather conditions have adversely affected wheat production, impacting the country’s buffer stock. The current rabi sowing season is trailing behind the previous year, and the weather outlook, influenced by the El Nino phenomenon, may further impact output.
The decision to reduce import duties will depend on the final wheat sowing acreage by the end of December, as per a credible source. Over the past month, wheat acreage has been lagging, with the latest sowing data indicating a decrease of 7 Lha compared to last year. Major wheat-producing states like Punjab and Haryana have witnessed a reduction in wheat sowing areas.
Despite the challenging domestic scenario, the global wheat production outlook is also unfavorable. Australia, a major wheat producer, experienced a 40% production reduction to 23-24 mmt due to El Nino. Adverse weather conditions have impacted wheat production in China, the largest producer and consumer, with an expected import increase to 12-15 mmt next year. The government is concerned about the potential impact of El Nino on winter rains, affecting Rabi crop output and exacerbating India’s wheat buffer situation.
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