In news

India is set to turn a major exporter of wheat, that would be the highest ever in the last six years according to estimates of USDA (United States Department of Agriculture)

Supporting factor

With the Russia government levying a 25 euros-per-tonne export tax on wheat effective from February 15 – in response to high domestic prices – Bangladesh “is beginning to shift its purchases towards India”, the USDA has noted in its latest world grain trade report. Bangladesh’s total wheat imports are placed at 6.6 mt in 2020-21.

Issue

Indian wheat is still not competitive at the government’s minimum support price (MSP) of Rs 19,750 per tonne.
The export price of wheat bought in Gujarat at that rate – after adding roughly Rs 1,200 towards cost of cleaning, bagging, loading and transport to Kandla or Mundra port – would be Rs 20,950 per tonne.

Solution

• If wheat is sourced at below MSP from Uttar Pradesh, Bihar, Gujarat and Maharashtra, where not much government procurement happens.
• The new crop arriving in these markets from March onwards would be available at Rs 17,000-18,000/tonne.
• This wheat can be exported by rail rakes to Bangladesh or shipped to the Middle East (UAE, Oman and Bahrain) and Southeast Asia (Indonesia, Vietnam and Malaysia).

Report on Rice

The USDA report, meanwhile, has also estimated India’s rice imports to have hit a record 14.4 mt in 2020, up from 9.79 mt and 11.791 mt of the preceding two years.
The country’s closest competitors – Thailand and Vietnam

Source: Indian Express