Russia-Ukraine War fallout: Demand for wheat from India soars; retail giants approach Punjab traders

Ruchika M Khanna

Chandigarh, March 5

The Russia-Ukraine war has led to an increase in demand for wheat from India in the international market. Being the largest wheat producing state in the country, Punjab could benefit from this rise in demand, provided the government reduces taxes on private purchase of wheat.

Commission agents and wheat traders in Punjab have told The Tribune that a number of enquiries were being received for the past week from global food retail giants and foodgrain exporters like ITC, Cargill, Adani Group and Australian Wheat Board. Teams of some of these exporters are already visiting the state to assess the quantum of wheat they can buy from here.

Satish Kumar Arora, a flour mill owner in Khanna, said the price of wheat had shot up by Rs 100 a quintal since Wednesday. He said exporters were willing to pay up to Rs 2,450 per quintal (at Kandla port, including freight charges), against Rs 2,000 per quintal a week ago. This interest has arisen because the war has choked the global supply of wheat, pushing its price by over $11 a bushel. Russia and Ukraine account for nearly 40 per cent of the global wheat supply and the war has reportedly held back shipments, said traders.

This has led to many traders and commission agents demanding that the taxes imposed on private purchase of grains from Punjab be reduced so the state’s farmers and traders can benefit from the demand. Harbans Singh Rosha, a commission agent in Khanna, said though they expected a good demand from private traders this procurement season (beginning April), the high taxes could prove to be a deterrent.

The taxes include three per cent each market fee and rural development fund, 2.5 per cent commission to agents and one per cent service charges.

“For many years, private purchase of wheat from Punjab has been negligible, even though the state is its highest producer. Private players prefer to buy wheat from Uttar Pradesh, Madhya Pradesh and Rajasthan because of low prices there. If the government wants to earn profit through wheat export from Punjab in the upcoming procurement season, it should reduce the taxes imposed on private players,” he said.

Supply stuck

Russia and Ukraine account for nearly 40 per cent of the global wheat supply and due to the war the shipments were stuck, said traders.