Amid Covid chaos and protests, India's farmers eye record wheat crop

They are on track to gather record 109 M tonnes this year, posing headaches for a government, says food policy expert

Reuters April 29, 2021

While India battles soaring Covid-19 infections, on the outskirts of New Delhi thousands of farmers still occupy camps where they are keeping up a months-long sit-in protest against government legislation that they say harms them.

Underlining the organised nature of the movement as it tries to force Prime Minister Narendra Modi to revoke reforms aimed at making agriculture more efficient, farmers are being ferried to and from villages in order to harvest this year's wheat crop.

The logistical feat is working, at least from the farmers' point of view. They are on track to gather a record 109 million tonnes this year, posing more headaches for a government that some experts say underestimated the strength of rural anger.

To appease protesters, the state grain purchaser is likely to have to procure large quantities of wheat at guaranteed prices, trade sources said, eating into the budget and bloating already high stock levels.

"The government perhaps believed that the agitation would fizzle out as farmers left for harvesting, but they have come up with a smart strategy," said Devinder Sharma, an independent farm and food policy expert.

"I think they are here for a long haul."

A senior official involved in agricultural policymaking said the government had held several rounds of talks with farmers.

"The government is keen to sit with the farmers and address their grievances, but the farmers also need to come with an open mind," said the official, who did not want to be named as he is not authorised to talk to the media.

Protest leader Amreek Singh has no doubt that protests can last as long as is necessary.

Referring to a stack of thick, beige-coloured registers, he explained how the number of demonstrators at his site had remained constant despite the departure of farmers to the village of Shahjanpur in grain-growing Haryana state.

Volunteers have prepared village rosters to ensure that every time a group of farmers goes to harvest the wheat crop, a group of similar size joins the protests, Singh told Reuters at Singhu, one of three protest camps on the outskirts of the capital.

Singh said there was a similar arrangement for Punjab and Uttar Pradesh states, also part of India's grain belt.

At Singhu, organisers have pitched white tents and thatched cottages to house protesters over the summer, and communal kitchens have started stocking up traditional Indian syrups to help farmers stay hydrated.

One of the farmers on Singh's roster is Rajendra Beniwal, who travelled to Shahjanpur, some 100 km (65 miles) north of Delhi, in mid-April to take part in the harvest. He aims to return to the protests as soon as the job is done.

"I have come along with 23 farmers from my village," said the 55-year-old, sitting next to his 12-acre plot carpeted with golden wheat.

"Big wheat harvests have always been challenging logistically, but never has it been so frustrating. At the time of harvests, no one wants to stay away from their fields and their villages."


Farmers began marching towards New Delhi in November to protest against three laws that give the private sector a greater role in buying, pricing and storing agricultural goods and reduce state protection enjoyed by growers for decades.

Modi, his government and some economists argue the laws are needed to modernise India's agriculture, making it more efficient and attractive to private investment.

Three giant protest sites were erected along highways leading into Delhi, and marches into the city involving tens of thousands of people have sometimes ended in violent clashes with police.

As COVID-19 cases spiralled, Agriculture & Farmers Welfare Minister Narendra Singh Tomar asked farmers to call off their campaign to prevent outbreaks of the coronavirus at protest sites. But farmers say they will not budge until the government concedes to their demands.

Volunteers at the camps have started distributing face masks and spraying disinfectant, and hand-washing stations and hand sanitiser dispensers have been installed.

As the movement gathered steam last year, farmers had not forgotten their livelihoods. By late November they had planted wheat on a record 34.5 million hectares, resulting in this year's bumper crop estimated to be worth more than $40 billion.

That has created problems for state grain purchaser the Food Corporation of India (FCI), which is committed to buying more wheat if production rises under the country's generous food welfare programme - the world's biggest.

With private global trading companies largely absent amid the coronavirus pandemic, its purchases go up further.

Trade and industry sources said the FCI's wheat buying would certainly exceed last year's record procurement of about 39 million tonnes, at a time when stocks were already plentiful.

"Our idea is to support the farmers and we are committed to buy as much wheat as possible," said the government official.

Wheat stocks at FCI's warehouses on April 1, when the new marketing season began, were a record 27.3 million tonnes, nearly four times the target. Rice inventories totalled 49.9 million tonnes, compared with a target of 13.6 million.

Last year, FCI had to store more than 14 million tonnes of wheat in temporary sheds, and will have to find more makeshift storage in 2021/22.

Rising prices are adding to India's food bills.

In the past decade, the price at which FCI buys wheat and common rice grade from farmers has climbed by 64% and 73% respectively and storage costs have also risen.

Yet the prices at which FCI sells 5 kg (11 pounds) of wheat and rice each month to more than 800 million beneficiaries of the food welfare programme have remained unchanged at 2 rupees (2.6 U.S. cents) and 3 rupees a kg, respectively.

FCI's debt has ballooned to 3.81 trillion rupees ($51 billion), alarming policymakers.

In the fiscal year to March 2021, the government provided an extra 1.18 trillion rupees to help FCI clear debt on top of 3.44 trillion rupees given to FCI for its 2020-21 food subsidy bill.

India's fiscal deficit widened to 9.5% from 3.5% due to the extra allocation to FCI and amid a revenue shortfall.


Some traders said India missed a rare opportunity to export wheat when global prices jumped by $70 to $280 a tonne free on board (FOB) in August-December last year.

With a $20 a tonne domestic transport subsidy, India could have shipped more than 5 million tonnes of wheat to overseas buyers, said Rajesh Paharia Jain, a senior trader at Unicorp Pvt Ltd.

"Only once in a blue moon we get opportunities like this," Jain said. "By dragging its feet on announcing a small internal freight subsidy, India missed a rare chance to export wheat."

The government official said authorities could not act with the same freedom as regular traders, and had only limited ability to switch exports on and off as prices fluctuated.

Global prices have eased since, so Indian wheat now costs around $280 a tonne against $220-$225 for higher quality Australian wheat. By June-July, supplies from Russia and Ukraine will arrive, closing the door on Indian exports altogether.

India's recent bumper harvests are the result of the "Green Revolution" of the 1960s, a huge agricultural expansion to cut down on grain imports.

It helped the government cushion the blow from droughts in 2014 and 2015 and enabled Modi's administration to distribute free grain during last year's coronavirus lockdown.

But maintaining such a large inventory of wheat could hurt the farm sector in the long run, some economists said.

"The solution lies in formulating an agile export policy," said food policy expert Sharma. "That will be a win-win situation for the government and our farmers."


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