India's Wheat Export Boom Brings a Bonanza to Growers

Rajensingh Pawar, an Indian farmer, is selling his fresh wheat harvest to private merchants rather than the state stockpiler for the first time in almost a decade, as the worldwide wheat price rise provides India's suppliers with a rare profitable export window.

Strong demand following Russia's invasion of Ukraine has resulted in producers obtaining the best prices for their harvests in history, while also relieving strain on the state's grain procurement agency, which has racked up massive debts as a buyer of last resort.

What Farmers and Traders are Saying?

"Traders are willing to pay more than the MSP for the first time in a long time," Pawar, 55, added, referring to the minimum support price at which the Food Corporation of India (FCI) buys grain from farmers.

As he unloaded wheat at a grain market in Madhya Pradesh, the state popular for its high-quality wheat, he remarked, "India's increased wheat exports have benefitted farmers like us who are getting a lot greater return."

According to Rajesh Paharia Jain, a New Delhi-based merchant, wheat export arrangements have been negotiated for between $330 and $335 per tonne free on board. This is roughly $50 per tonne less than competing suppliers, owing to a surge in global prices and massive surplus supplies at home, making it simpler for Indian suppliers to provide a discount, but it is still far more than local rates.

India's sales are helping to fill a supply gap in international wheat markets caused by Ukraine-related interruptions in the Black Sea area, crop cuts in Canada, and quality downgrades in Australia.

Prior to the roughly 50% spike in global wheat prices, India had difficulty exporting the crop due to annual hikes in the MSP (Minimum Support Price) to appease the politically powerful agricultural lobby, which rendered Indian wheat more costly than international prices.

However, shipments from India have become more appealing due to a rare combination of high international pricing, successive record crops, a lower rupee versus the dollar, and improved internal logistics.