India’s wheat production falls 10% below government projections

10 July 20232 min reading
According to a Reuters report published on June 21, India’s wheat harvest in 2023 is estimated to be at least 10% lower than the government’s initial projections, leading to a significant surge in local prices over the past two months.

The lower wheat production for the second consecutive year could pose challenges for New Delhi in controlling prices of this staple crop and overall food inflation, which is a major concern given the forecasts of an El Nino weather pattern.

“Availability of wheat is very poor in the market. It suggests production was around 101 million to 103 million tons,” Pramod Kumar, President of the Indian Roller Flour Millers’ Federation, told Reuters. In contrast, the government had reported a record wheat output of 112.74 million metric tons in 2023, up from 107.7 million metric tons in the previous year. India’s annual wheat consumption stands at approximately 108 million metric tons.
As farmers have started harvesting wheat since March and sell most of their crop to state agencies and private traders by June, the declining supplies from farmers indicate that the agriculture ministry’s production estimate is overly optimistic, according to Kumar.
The prices of wheat in New Delhi have surged by 10% in the past two months, reaching 24,900 rupees ($303) per metric ton. Consequently, the government has imposed a limit on the quantity of wheat stocks that traders can hold, marking the first such restriction in 15 years.

Traders based in New Delhi and Mumbai have echoed the sentiment that the farm ministry overestimated this year’s wheat output, Reuters reported. They also pointed out that the government failed to consider the impact of heatwaves in February and March, as well as untimely heavy rainfall in April. The government has purchased 26.2 million metric tons of new-season wheat from farmers, falling short of the initial projection of 34.15 million tons, indicating lower production. “The government was forced to U-turn on exports last year because of the wrong estimate. This year, it could be forced to allow duty-free imports in the December quarter,” said the trader based in Mumbai.
India, the second-largest consumer of wheat globally, had banned exports in May 2022 due to a sudden decline in output caused by a rise in temperature, coinciding with a time when global shipments were increasing to address the shortfall resulting from Russia’s invasion of Ukraine.

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