WHILE farmers in Russia, Ukraine, the US and Europe are all planting or have just finished planting their winter crops, Indian farmers too are thinking about planting their next wheat crop.
And they have just been given something additional to think about.
Late last month, the Indian Government is reported to have raised minimum prices for the upcoming rabi (or winter-planted) wheat crop.
The increase, reportedly equivalent to around US17 a tonne, is larger than increases in recent years.
Low global and local farm-gate prices and a couple of unfavourable production seasons in India provide the backdrop for the increase.
Most notably, however, the sizeable volume of imports in 2016/17 must be a key driver.
Last year was only the third in 20 years where imports have been so notable.
Between 2.2 million tonnes in 1998/99, 6.7 million tonnes in 2006/07 and some six million tonnes last year, average Indian wheat imports have been just 300,000 tonnes per year.
In increasing the minimum wheat price, Indian policy makers will have also been looking at their local wheat stocks situation.
Unlike most of the rest of the world where stocks are high, and globally at record levels, Indian wheat stocks are down.
The USDA estimates that incoming wheat stocks for India this year are just 9.8 million, which is down 33 per cent on last year and down almost 50pc on the five-year average.
The minimum support prices for other rabi crops – including barley, chickpeas, lentils – have also been increased, however the guaranteed government procurement program for wheat will ensure that it is favoured in rabi crop planting.
However with low stocks, and consumption set to hit 100 million tonnes this year, Indian wheat import requirements are forecast to still be substantial this year, at 3.5 million tonnes (USDA).
In between years of higher import requirements, Australia is the consistent supplier of wheat to India, typically accounting for 90 pc of import requirements.
This is higher quality milling wheat purchased for blending and direct use in products, primarily to satisfy demand from the growing middle class.
However when wheat import requirements balloon, as they did last year, Australia’s proportion falls significantly.
Last year Australian wheat accounted for just 42pc of Indian wheat imports with Ukrainian wheat at almost 50pc.
Still, Australian wheat exports were some 2.5 million tonnes last year, a great benefit to Australia in a year of record production.
This year, Australian wheat export volumes to India will certainly be lower than last.
Local Australian wheat prices are likely to mean that our proportion of Indian import share will also be more under pressure this season than last year.
Significant demand from India will continue to come and go.
For Australian grain farmers, it is maintaining and growing the consistent imports between the high import years that should be focused on.
Admittedly trade with India isn’t always easy with tariffs and technical issues also coming and going.
However when it comes to crop planning for Australian wheat farmers, the growth potential in India’s middle class and resulting demand for higher quality milling wheat should be a consideration in the mix.
