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Informist, Friday, Feb. 21, 2025

 

By Shreya Shetty, J. Navya Sruthi, and Afra Abubacker

 

MUMBAI/NEW DELHI – Though the area under various rabi crops is higher this year than the previous one, factors such as above-normal winter temperatures and moisture stress have affected yields. Experts and trade bodies see another deficit year for wheat, which may force India to import the grain.

 

Experts expect the wheat output this rabi season to be at least 10 million tonnes below the government's target of 115 million tonnes. The government's second advance estimate for 2024-25 (Jul-Jun) is due this month.

 

Among the rabi crops, the situation is not as grave for pulses and oilseeds. Chana production is unlikely to rise from last year, but is also not expected to fall drastically. Similarly, though production of masur is seen down this year, analysts deem it satisfactory. The output of both the pulses is seen falling short of the government's target.

 

Production of mustard, the largest rabi oilseed crop, is also seen lower from the record output of last year. Though the government has been pushing for higher domestic production of oilseed and pulses, experts say India will have to continue importing them.

 

Amid the huge imports, domestic prices of most pulses and oilseeds have been depressed, prompting farmers to shift to wheat, maize, and vegetables like potato for better returns. After allowing import of edible oils at a lower duty for more than two years, the government, in September 2024, imposed 20% duty on cooking oils to protect the interest of farmers.

 

However, the move has not led to fall in imports, because domestic consumption continues to grow. During Nov-Jan, India imported 3.8 million tonnes of edible oil, up from 3.6 million tonnes last year. Meanwhile, import of most pulses continues to be free. This does not bode well for India's self-sufficiency goals. For the edible oil mission, the government has allocated INR 101.13 billion for seven years and INR 10 billion for the pulses mission for a six-year period.

 

WHEAT

Wheat is set for another deficit year in 2024-25, market participants said. Lower acreage, fall in yields due to above-normal temperatures in winter, and low rainfall during the northeast monsoon are likely to affect production of the largest rabi crop, they added.

 

"After the last sowing report, which was released on Jan. 31, there was no report and therefore we have to assume that acreage number as the final acreage for the rabi crop. Wheat acreage last year was 34.2 million hectares, whereas this year it is only 32.5 million hectares," G. Chandrashekhar, commodity market expert and policy commentator, said.

 

Wheat output in 2024-25 is likely to be 102 million tonnes to 104 million tonnes, but only if the weather is favourable over the next three or four weeks, Chandrashekhar said. However, if above-normal temperature and dry conditions continue, the output could fall to 95 million to 98 million tonnes, he added.

 

Deepak Pareek, founder of Global Grains and Pulses Council, pegs wheat production at 96 million tonnes to 98 million tonnes. The government's target for wheat output in 2024-25 is 115 million tonnes.

 

"India is heading into a wheat crisis," Pareek added. Since 2022, the Indian wheat market has been in deficit, and prices have been rising. In 2023-24, to check rising prices, Food Corp. of India sold a record 9.4 million tonnes of wheat under the open market sales scheme.

 

This also poses a challenge for government's wheat procurement operations. With lower wheat output and firm prices, market participants doubt if farmers will sell their produce to the government. In January, wheat prices rose to an all-time high of INR 3,350 per 100 kg. The minimum support price for wheat in 2025-26 is INR 2,425 per 100 kg.

 

The government will be very lucky if it can buy at least 20 million tonnes, Pareek said. In 2024-25, the government had procured 26.6 million tonnes, against the target of 30 million-32 million tonnes. With a shortfall in wheat output, higher prices, and lower procurement, the government may be forced to encourage imports in August, Pareek said.

 

Although wheat prices may be pressured from April to June because of rabi crop arrivals, lower production coupled with lower procurement will send a bullish signal to the market, Chandrashekhar said. "Starting July, prices will rise again and that will put pressure on the policymakers to start exploring options to import."

 

PULSES

Though chana production is seen falling in the 2024-25 rabi season, the overall situation is not "too bad", analysts said. Experts see chana output at 9.5 million tonnes to 10.4 million tonnes, marginally down from 11.04 million tonnes last year. The government's target for chana crop in 2024-25 is 13.65 million tonnes.

 

Chandrashekhar estimates chana output to be 10.0 million tonnes to 10.4 million tonnes. "It is not a bad crop, but it is not a bumper crop either," he said. As of Jan. 31, chana was sown over 9.85 million hectares, slightly lower from the normal area of 10.1 million hectares, government data showed.

 

However, chana output has fallen in areas with low soil moisture. "Parts of Madhya Pradesh, Rajasthan, and the Vidarbha region in Maharashtra have moisture stress, impacting yield," Chandrashekhar said.

 

Rahul Chauhan, director, IGrain, pegs chana output at 9.5 million tonnes to 10.0 million tonnes as the crop requires less water and is quite resistant to heat. However, if temperatures rise further, the crop might be affected, weighing on the output, he added.

 

Pareek sees chana production in 2024-25 at 9.4 million tonnes, with a wiggle room of about 5%. "This is not a good situation as we don't have a buffer," he said, but added that large imports of chana and yellow peas can make up for any shortfall in production.

 

While the duty-free imports have improved the supply situation, it has pulled down chana prices drastically, with current market rates nearing the minimum support price of INR 5,650 per 100 kg. Once rabi arrivals begin, prices are expected to fall below that level for at least two months, experts said.

 

"It is not good for chana farmers. We do not want to repeat the edible oil story, where imports keep increasing and domestic prices keep crashing," Pareek said. With domestic pulses production falling short of consumption needs, India has kept imports of all major pulses at nil duty. To protect both farmers and consumers, analysts suggest tariffs and regulations on imports, instead of an outright ban.

 

The production of masur, another rabi pulse, is also seen falling. While masur output is likely to meet the target of 1.65 million tonnes, Chandrashekhar said it will not satisfy the country's consumption of about 2.2 million tonnes. "...there will be a supply gap of about at least half a million tonnes, which probably will have to be imported," he said. Imports of masur have been duty-free since May 2021.

 

OILSEEDS

Production of mustard--the largest rabi oilseed--is likely to fall in 2024-25 due to a decline in acreage. Market expects mustard production in 2024-25 to be 10 million tonnes to 12 million tonnes, lower than the target of 13.8 million tonnes. In 2023-24, India produced a record 13.3 million tonnes of mustard seed.

 

"We have commissioned an agency to survey mustard crop. The report will be out only in March. Flowering season is going on and it is too early to give an estimate," B.V. Mehta, the executive director of the Solvent Extractors' Association, said. However, the trade consensus is 11.5 million tonnes to 12.0 million tonnes, he added.

 

As of Jan. 31, the area under mustard cultivation fell nearly 3% on year to 8.39 million hectares. However, the cultivation is higher than the normal area of 7.92 million hectares, according to farm ministry data. Mustard sowing declined due to unfavourable weather and warmer-than-normal temperature conditions in November and early December.

 

A fall in the largest rabi oilseed output does not bode well for India's push to reduce imports. Under the INR 101.03-billion-outlay mission on edible oils, the government aims to reduce imports of cooking oils to 28% from 57% by 2032. The country imports palm oil, soybean oil, and sunflower oil in large quantities.

 

The table below gives estimates from private traders and experts on production of wheat, chana, masur, and mustard in 2024-25 (Jul-Jun) collated by Informist, and details of the government's target along with the last year's output, in million tonnes:

 

Name	Wheat	Chana	Masur	Mustard
Rahul Chauhan, Director, IGrain	105-110	9.5-10	1.6-1.7	10.5
G. Chandrashekhar, commodity market expert and policy commentator	102-104	10-10.4	1.7-1.8	10-10.5
Gaurav Kochar, trader, Gaurav Brothers	105	7.5	0.8	8.5
Deepak Pareek, founder of Global Grains and Pulses Council	96-98	9.4	-	-
G.K. Sood, farm expert	100	9.5	1.65	-
Government Target for 2024-25	115.0	13.65	1.65	13.8
Government Final Estimate for 2023-24	113.3	11.0	1.8	13.3

 

End

 

Edited by Ashish Shirke

 

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