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Informist, Thursday, Jan. 23, 2025

 

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--IGrain Chauhan: See 2024-25 wheat production at record 110 mln tn
--CONTEXT: IGrain India Director Rahul Chauhan in interview with Informist
--IGrain Chauhan:See wheat at INR 2,800-INR 2,900/100 kg in Delhi in Mar-Apr
--CONTEXT: Current price of wheat in Delhi at INR 3,300/100 kg
--IGrain Chauhan: Current FCI wheat stocks low but at a comfortable level
--IGrain Chauhan: Govt may not import wheat as new crop arrives in Mar
--IGrain Chauhan: See FY25 maize imports at 1.1-1.2 mln tn 
--IGrain Chauhan: See prices of pulses falling below MSP
--IGrain Chauhan: Low pulses prices offer govt opportunity to build stocks
--IGrain Chauhan: Govt likely to extend free imports of chana, urad, masur
--IGrain Chauhan: Govt needs pulses imports to control inflation
--IGrain Chauhan: Govt may announce greater agri support in upcoming Budget

 

By Shreya Shetty, Anjali Lavania, and J. Navya Sruthi

 

MUMBAI – Domestic prices of pulses are likely to fall below the minimum support price due to high imports following extension of the duty-free import policy, IGrain India Director Rahul Chauhan tells Informist. "However, it will be a golden opportunity for the government to make buffer stocks of all pulses," he says in an interview.

 

The government, he says, is likely to extend duty-free imports of yellow peas beyond Feb. 28 and of other pulses such as urad and chana beyond Mar. 31, for another year.

 

Wheat production in 2024-25 (Jul-Jun) is likely to be at a record level of 110 million tonnes, Chauhan says. "On seeing the current market scenario and the sowing figures...I see record level production of wheat this year." For the previous year, Chauhan had estimated wheat production at 100-105 million tonnes.

 

Wheat prices are likely to see a significant fall from current levels once arrivals of the new crop start in March, he says.

 

Talking about oilseeds, Chauhan says that although the government has increased the import duty on edible oils, this hasn't had much of an impact on the Indian market. Soybean prices are still below the minimum support price of INR 4,892 per 100 kg because of huge imports of soyoil and higher production in the current year.
 

Following are edited excerpts from the interview:

 

Q. With wheat sowing exceeding the normal area for the season, how much do you think prices of the staple grain will fall as arrivals start in February?

A. It was expected that the wheat area would increase this year as prices of the grain in the benchmark market, Delhi, reached a good level. And as of last Friday, about 32 million hectares was sown with wheat, which is more than the 10-year average, that is for normal area, and more than last year. Today (Tuesday), it was traded at INR 3,300 (per 100 kg).

 

For prices to come down, there are many factors that are clubbed in. One factor is that we need at least two years of record production to keep our stocks at a comfortable level, like it was in 2022-23. By record two-year production, our stocks will be at a good level. After that, I think prices may come down.

 

I see record production of wheat this year. It depends on the weather because we have enough time left for the new crop to come to the market. So, if the production of wheat reaches 110 million tonnes, which I'm expecting, prices will move a little bit on the downside. I see mandi prices at INR 2,600 (per 100 kg) and Delhi prices at INR 2,800-INR 2,900 (per 100 kg). 

 

Q. As of Jan. 1, wheat stocks with FCI were up 12.6% on year at 18.4 million tonnes. Considering this, do you think the government will increase the quantity of wheat at weekly e-auctions under the open market sales scheme?
A. This is nothing to be happy about. On Jan. 1, stocks of wheat in the central pool were 18.4 million tonnes; in January 2024, it was 16.3 million tonnes. In the year 2022 (as of Jan. 1), it was 33 million tonnes. So, you can see from 33 to 19 million tonnes, stocks are not at a very comfortable level. But we have enough stocks to cater to the market till the new crop comes through OMSS and through the Bharat Atta scheme.

 

Q. Do you think there is a need for India to import wheat?
A. No, I don't think the government will import wheat because first of all, according to the government, it has a comfortable stock. I also believe the stock is less, but at a comfortable level. New wheat arrivals start in Madhya Pradesh in March itself. From May, it will start all over India and if I allow wheat imports today, it will take at least 20 days for it to reach India. If I take in the container, it may take about 40-50 days from Russia, and we can import only from Russia as prices there are lower than in the other regions. By the time shipments reach India, prices may fall, which may create problems for farmers. 

Farmer agitations are going on. If the government does that (import wheat), the fire may spread more. When prices come down, of course, farmers will not be happy and opening import is the last step. So, in favour of farmers, in favour of trade and our national interest, I think they are not going to allow wheat imports this year and next year too.

 

Q. Do you see the government hiking rates of ethanol derived from grain-based and cane-based feedstock? 

A. Yes, it (government) should increase prices by at least 5-10%, which is normal. Prices (of ethanol derived from grain-based and cane-based feedstock) have not been changed for a long time and for sugar mills to have a profitable business, the government should increase the prices of ethanol made from maize or sugar.

 

Q. The government has recently reduced prices of rice for sale to ethanol distilleries to INR 2,250 per 100 kg from INR 2,800. Will this lead to a reverse shift of demand from maize to rice for producing ethanol?
A. This ethanol programme comes as a blessing to maize farmers. About rice, there's an ample amount of rice stocks available, maybe four times the stocking norms. And our rabi season crop is also coming...we need to have space to store. So, the government has reduced the price for distilleries.

 

Following this announcement, maize prices have fallen about (INR) 100 to (INR) 150 (per 100 kg) in some markets. It (reducing the price of rice) will create an impact on the unexpected demand for maize which rose (last year). And that space (after selling rice) can be used to procure wheat, which is the need of the hour.  

 

Q. Do you think the availability of rice at a lower rate will reduce India's dependency on maize imports?
A. Yes, it will reduce dependency on maize imports. And in this financial year, I think maize imports may be around 1.1 to 1.2 million tonnes because we need a huge amount of maize for ethanol. (Last year, imports of maize were 137,093.6 tonnes)

 

Our dependency on maize imports will depend on the government's decision – whether they are going to extend the TRQ (tariff rate quota) or not, but as for my thinking, they will extend it because there is huge demand (for maize) and there is a target for ethanol blending in India.

Q. Despite predictions of improved rabi sowing by analysts due to a good monsoon, chana acreage has increased only 2.5% on year, while masur acreage is down 2% so far. Why?

A. The amount of sowing depends on the prices farmers get when selling their crops. Chana prices peaked in 2024, reaching an all-time high of INR 8,000 per 100 kg in August, prompting the rise in acreage.

 

However, the prices farmers are getting for wheat and maize are even better, which is why chana acreage has not increased as much. Yes, we had very good rainfall, soil moisture was good, but everything depends on the farmer's mood. Apart from shifting to other crops, there is no other reason for the unsatisfactory rise in chana acreage.

 

In the case of masur, wholesale prices reached below minimum support prices last season. And, there is huge import of masur. Availability of pulses through imports is good, so their area has been used to sow other crops with better returns.

 

Q. With prices of various pulses already nearing minimum support prices, will prices drop further? If so, how long will they stay below those levels?

A. Prices have fallen because of duty-free imports of pulses, which have been extended repeatedly. We have imported around 2.8 million tonnes of yellow peas since lifting the 50% duty in December 2023. Out of that, 1.1 million tonnes is still sitting at various ports in the country. All of this will be consumed by the country.

 

Prices of yellow peas are already the lowest among all pulses, so it is being consumed as a substitute for both chana and tur. See, prices of pulses follow each other. If the price of one variety of pulses changes, the others follow suit. If prices of tur fall due to imports, prices of other pulses would also fall due to the same reason.

 

So, yes, there is a possibility of prices falling below the minimum support price as imports will keep on increasing. However, it will be a golden opportunity for the government to make buffer stocks of all pulses.

 

Q. As of Tuesday, duty-free import of tur was extended by another year, till Mar. 31, 2026. Why did the government extend it, and will other pulses follow suit?

A. The first reason behind the extension is the need to control retail inflation. Second is the need to ensure ample availability of pulses in India. The weather is unpredictable – if we have a very bad season, all the production figures change drastically. So, the government needs to have a good stock of pulses.

 

The government has also signed a memorandum of understanding with several countries, which they have to follow through. They will extend the duty-free imports of other pulses by a year as well.

 

Q. Are there any expectations of the government announcing further measures in the Budget to promote self-sufficiency in pulses?

A. Yes, they should do so. It should improve the income of farmers. The government should give more budget on technology used to make seeds, fertilisers, all those things. They should allocate more for farm mechanisation also if we want to be food-sufficient. Rather than giving our money to overseas farmers, that money can be used for our farmers, for our technology, for our economy.

 

Q. How are huge imports affecting domestic oilseed prices?

A. We are importing 70% of edible oils from abroad. Market prices are totally driven by international prices. The government of India has increased basic customs duty on edible oils. (However), the impact of increasing import duty was not seen on the Indian market.

 

Due to the increased availability of edible oils, local demand for oilseeds came down, and it has certainly created an impact on farmer income. Last year, farmers got very good prices for soybean and this year, they are getting prices far below the minimum support price. This season, we have good production, but farmers haven't got good prices. The impact of lower prices of soybean will create a problem in the next season, that is what I feel.  End

 

Edited by Avishek Dutta

 

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