Australia expects the Indian government to reduce the import duty on wheat later this year to cool down high prices.
“Wheat export opportunities to India are likely to open up for Australian growers,” said Kiran Karmil, Counsellor, Agriculture, Department of Agriculture, Fisheries and Forestry, Australia at an India Pulse Briefing on Friday.
Indian farmers were benefitting from high prices, but the Indian government would like to bring down the prices. “We expect a duty cut by the middle of this year,” he told the briefing that was also webcast.
While the Ministry of Agriculture and Farmers’ Welfare is targeting a record wheat production of 115 million tonnes (mt), some forecasts peg it at 116.4 mt based on the AgPulse yield model.
IMD forecast
However, the India Meteorological Department (IMD) has predicted that India’s wheat crop could be affected by below-normal rainfall in February. IMD data show that about 90 per cent received deficient or no rainfall between January 1 and February 14. Besides, over 60 per cent of the country received deficient post-monsoon rainfall during October-December 2024.
In view of this, a section of the trade is projecting a wheat crop below 110 mt. According to data from Agmarknet, a unit of the Ministry of Agriculture, the weighted average price of wheat at agricultural produce marketing committee (APMC) yards across the country is currency to ₹2,879 a quintal.
Though prices have dropped by over ₹125 since the beginning of this month, they are still above the Minimum Support Price (MSP) of ₹2,425 a quintal for the current season. If prices stay above the MSP, the Indian government’s procurement for the central pool that meets any food emergency could be affected.
Prices have dropped mainly due to the Food Corporation of India (FCI) releasing wheat from its buffer stocks under the open market sale scheme. Last year, the Centre procured 26.64 mt of wheat with Uttar Pradesh, Madhya Pradesh, Bihar, Gujarat and Rajasthan making up 70 per cent of the purchases.
Traders’ view
According to the latest data, wheat stock maintained by the FCI was higher by 22 per cent at 16.17 mt as of February 1 against 13.27 mt in the year-ago period. Similarly, rice stocks are also higher by 17 per cent at 67.6 mt against 57.66 mt a year ago.
Traders argue that with FCI selling 4 mt of wheat every week, the foodgrain stocks could drop to below 0.5 mt by April 1, when the procurement begins officially.
The Australian Agriculture Commissioner’s statement has to be viewed in the background of concerns in India over procurement for buffer stocks.
‘Big opportunity’
According to John Southwell, Mumbai-based Senior Trade and Investment Commissioner, Australian Trade and Investment Commission, wheat growers Down Under could get a big opportunity in India.
India requires 100-105 mt of wheat for domestic consumption, 3-4 mt for sowing and 5-6 mt for feed and industrial use, he said, adding that India imposes a 44 per cent duty (40 per cent basic customs duty plus agriculture infrastructure cess) on wheat imports.
Monica Kennedy, Head of Austrade, South Asia, said Australia was negotiating for the Comprehensive Economic Cooperative Agreement (CECA) for free trade with India. It is trying to convert the temporary Economic Cooperation Trade Agreement (ECTA) into CECA with India.
“We are getting positive vibes from the Indian government on the free trade agreement. We are trying to get a good deal for everyone,” she said.
Focus on non-tariff barriers
Asked if Australia was trying to get the import duty lowered for its wheat by India, Kamil said he would not go public with the negotiations being held with India.
Peter Bruguet, Senior Manager, Trade and Market Access, Grains Australia, said Canberra was focusing more on non-tariff barriers, particularly India’s zero tolerance on weed seeds.
If India restores the import duty on lentils, Australia is working on the allocation of the 1.5 lakh tonnes of lentils that will qualify for a 50 per cent import duty cut.
He said wheat grown in Punjab is not up to milling quality and hence, Australian wheat could fill in milling demand, particularly by exporting to Chennai.
While Southwell said Australia is the leading supplier of oats to India, overtaking Ukraine in 2022, Bruguet said Australian barely had good chances of gain market in India.
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