Nobody won but exporters enjoy spoils of war

Business International

Russia and Ukraine’s war caused a global wheat crisis which encouraged India to export more rice and wheat.

There has been a rise in exports of rice and wheat from India due to the ongoing Russia- Ukraine conflict, say experts.Exporters fear the popularity of rice-based products like broken- rice could be  only temporary.

Aashutosh Agrawal, CLRK Industries Pvt. Ltd., exports both rice and wheat. He said that he saw growth in both rice-based products and wheat-based products.  “We saw three times more demand for wheat-based products in countries in the Middle East, Egypt and Europe,” he said.

Vansh Agrawal, Sarala Foods Pvt. Ltd. said that the company exports rice-based products and saw a significant increase in demand for broken rice—this is   used as a substitute for wheat-based products to feed cattle.   

“As the price of wheat-based products increased throughout the world, broken rice is being used as its replacement in cattle feed,” he added.

Broken rice in Vansh’s company is in more demand than the popular Basmati variety—popular, particularly in Iran. The company used to export more to Africa but currently there is an increase in demand from Benin, Cameroon, Guinea and Bissau in West Africa. They are not sure if the popularity of broken rice will continue after the situation gets to normal. but as of now, there is an increase in rice-based products and exports increased.

Vinod, secretary of All India rice exporters association (AIREA), said that for the last two years they saw the growth of exports for rice-based products which includes both Basmati and Non-Basmati rice.

 “It is expected to touch 50 lakh tons in exports this year, an increase from 46 lakh tonnes in exports in 2021. Governments are looking at rice as an alternative to feed their population as wheat has become an expensive commodity,” he added.

Data from the Ministry of Commerce & Industry stated that India’s wheat exports topped $872 million in April-October (2021–22), up from $135 million in April-October (2020–21) and on track to hit an all-time high in the current fiscal year. In 2020, India’s wheat exports will reach $243 million, up from $50 million in 2016.

Krishna Raj, Economics professor, ISEC  said, “The sudden surge in demand of both rice and wheat products is due to the ongoing war between Russia and Ukraine. The countries export more than 25 percent of global wheat and are largest exporters to both Europe and Middle-east. As there is no exporting from these two countries right now the dependent countries are looking for alternate places to get their items. It increased the production and export of both these items in the last two months in particular.”

Aashutosh attributed rise in exports to sanctions by western countries on Russia. He said that demand for particularly wheat increased significantly as the sanctions on Russia increased the price of wheat around the world. Due to this demand for wheat from other countries particularly Thailand, India and China increased,

Krishna agreed he said that countries like Pakistan, India, Thailand and China benefited from decrease in exports by Russia and Ukraine.

Farmers didn’t see any rise in income yet. Shiva, a farmer who cultivates rice said that he didn’t see any increase in revenue due to an increase in exports.