Madhya Pradesh waives mandi taxes to give wheat exports a push

Madhya Pradesh on Thursday announced a waiver of mandi fee and other levies aggregating 3.5% on grain purchases in the state, in a bid to boost to wheat exports — the prospects of which appear bright given the elevated global prices.

The state is the second-biggest producer of wheat in the country.

The decision was taken at a meeting attended by Union commerce, industry and food minister Piyush Goyal and Madhya Pradesh chief minister Shivraj Singh Chouhan in New Delhi. Chouhan will convene a meeting of wheat exporters in Bhopal on March 29.

The bulk of India’s wheat exports are currently sourced from Madhya Pradesh because of its proximity to the Kandla and Mundra ports. India is expected to export 7 million tonne (MT) of wheat in FY22, while the government is aiming at wheat exports of around 11 MT in FY23 amid rising global demand because of the Russia-Ukraine conflict.

Meanwhile, Goyal proposed setting up a task force on wheat exports with representatives from various ministries, including commerce, shipping and railways, and exporters.

“We are providing support to exporters in terms of freight registration, conducting meeting with importing countries and coordinating with various ministries,” M Angamuthu, chairman, Agricultural and Processed Food Products Development Authority (APEDA), said.

An anticipated surge in wheat exports is currently pushing up domestic prices above the minimum support price (MSP). In Madhya Pradesh, mandi prices are currently Rs 2,100- Rs 2,350 per quintal against the MSP of Rs 2,015 a quintal. A sharp fall is expected in procurement by agencies in the state because of the export prospects. Wheat procurement by agencies will start on April 1.

However the government has more than 23 MT of wheat stocks against a buffer norm of 7 MT.

“Farmers are happy and exporters are hands-on, full of orders and looking forward to a good season. To achieve these targets, logistical bottlenecks in the international freight markets must be tackled well,” said Kunal Shah, partner at Kunal Corporation, a Mumbai-based wheat exporter.

In Madhya Pradesh, the target was to procure 12.9 MT of wheat, which looks unlikely to materialise. This season, the wheat procurement target was set for Punjab (13.2 MT), Haryana (8.5 MT), Uttar Pradesh (6 MT) and Bihar (1 MT). In these states, arrivals of wheat will pick up after April 1.

In Uttar Pradesh, the country’s biggest producer of wheat, mandi prices are ruling above MSP at 2,300-2,500 per quintal. “It needs to be seen whether the market price of wheat continues to be higher than the MSP once the new crop starts arriving in the mandis,” an Uttar Pradesh Mandi Board official said. In FY21, UP exported 0.12 MT of wheat, mostly to Nepal.

Wheat exports in FY23 could potentially be 2.5 times the current year’s all-time high in value terms and close to nine times the shipments made in FY21.

India traditionally exports wheat to South Asian neighbours and northern Africa. Traders say exports from other wheat-producing states, especially Punjab and Haryana, will be challenging because of the absence of requisite transportation infrastructure, higher cost of transport to ports in the western region, and higher levies on grain purchase.