Indian Wheat Imports Impact on Wheat Futures

Jun 11, 2024

India is set to scrap its duty on wheat imports

By Devin Lashley
Farms.com Risk Management Intern

India will likely scrap its 40 percent duty on wheat imports after June, potentially creating 3-5 million tons of imports this season, potentially making it the 11th largest wheat importer in 2024/25.

This move would aim to replenish depleted reserves and control prices, which have surged due to three consecutive poor harvests.

Indian Wheat Exports and Imports Chart

India's wheat crop has been adversely affected by high temperatures, resulting in lower harvests in 2022 and 2023. This year's crop is also expected to be 6.25% lower than government estimates. Domestic prices remain above the state-set minimum purchase rate and have been rising recently.

Combine this with the fact that state wheat stocks also dropped to 7.5 million metric tons in April, the lowest in 16 years, after the government sold more than 10 million tons to control prices. Removing the import duty of course would help maintain reserves above the benchmark of 10 million tons.

The end of the general elections has removed a significant barrier, allowing New Delhi to facilitate wheat imports. Should the decision be made, the government is expected to lift the import tax in time for Russia's harvest, targeting modest volumes. Despite the recent surge in global wheat prices, industry experts believe duty-free imports are viable and essential to ensure adequate market supplies. Pramod Kumar, president of the Roller Flour Millers' Federation of India, advocates for removing the import duty to maintain sufficient market supplies.

A government official also indicated that the import duty would likely be removed after June to enable private trade to import wheat, with the duty reinstated before the wheat planting season starts in October to protect farmers' interests. Prime Minister Narendra Modi's Bharatiya Janata Party (now in a coalition government) is expected to take this course of action.

New Delhi-based traders estimate that around 3 million metric tons of imports would suffice, with Russia being the primary supplier. Imports could prevent a local price surge after the peak demand in October for the festival season, eliminating the need for large reserve sales.

Russia, however, is already dealing with a wheat shortage with Sovecon cutting Russia’s wheat harvest further to 80.7 million metric tons from its previous forecast of 82.1 million, the latest in a series of weather-related downgrades. This has led to the Russian government considering announcing a national state of emergency due to a lower harvest.

The dry/cold weather that impacted the Russian wheat crop send wheat futures surging to a 10-month high. Add the possibility of India importing wheat with global wheat ending stocks at a 16-year low, and it suggests that even more price rationing is needed. For now the news is priced into futures.

State procurement in India has also struggled, with only 26.2 million metric tons purchased against a target of 30-32 million. Despite government advice to refrain from purchases to enable state stockpiler Food Corporation of India to procure large quantities, procurement is unlikely to exceed 27 million metric tons.

India's food welfare program requires nearly 18.5 million metric tons of wheat. The main opposition Congress party has promised a monthly supply of 10 kg of free grain if elected, doubling the current provision under Modi's government.

Although overseas wheat purchases risk angering the influential farmer voting bloc, the limitation ends with the election. Despite the rise in global prices, duty-free imports remain economically viable, prompting calls for the new government to remove the duty and facilitate trade imports.

Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”