Current Trends in Indian Wheat Industry 2021-22

By Meenakumari R

India, being an agricultural economy, is one of the leading producers of a number of agricultural commodities. India’s food grain production in 2021-22 was raising and is recorded to be 314.51 million tons against 310.74 million tons the previous year. Even the rice production increased to 129.66 million tons from 124.37 million tons. A similar trend is seen for pulses, the volume of which grew to 27.75 million tons from 25.46 million tons. On the other hand, wheat production dropped by almost 3% to 106.4 million tons for the current year 2021-22, from 109.59 million tons last year. This is about 4.61 percent lower than the predicted volume of 111.32 million tons for the current year and is the lowest growth over 12 years. Union Ministry of Agriculture and Farmers’ Welfare has stated that the fall in the yield is more likely due to the heat wave mostly in Punjab and Haryana. Relative fall was also seen for cotton and coarse cereals (maize, millets, sorghum, and barley) production.

India’s Wheat Production in million tons India from 2016 to 2022

Trade and availability

India ranks 2^nd globally in wheat production (global production is 779 million metric tons)as it is the mostly grown grain next to corn (global production is 1207 million metric tons). China (134.25 million tons), India (109.59 million tons) and Russia (85.90 million tons) lead globally in wheat production. Domestic consumption in 2021-22 was 104.2 million metric tons which includes 25 million metric tons that went to support welfare programmes. India also exported nearly USD 549.67 million worth of wheatglobally in 2021;a figure many times higher than the previous year’s USD 61.84 million.As most of the countries are facing a demand-supply gap and are dependent on imports, India can take advantage ofthe supply gap that exists. Countries like Bangladesh, Nepal, UAE, Sri Lanka, Qatar, Malaysia, and others import wheat from India. Global wheat trade accounted to 473 million tons, yet India’s exports ranged to 7.85 million tons in 2021-22. It is still the higher than previous year’s 2.1 million tons.Being the second largest producer India can aim for more exports. The country also importedpastas, bakery, and confectionery products for the premium markets. 

UP (33 million metric tons), Punjab (17.1 million metric tons) and Haryana (11.8 million metric tons) are the leading wheat producer states of India.Domestic prices have been trending downwards, at an average of INR 18,500 per million metric ton from INR 19,750 the previous year.FCI along with state agencies is the nodal agencyfor wheat procurement in India with the help of 21106 procurement centers at minimum support prices. However in the current year overall procurement levels came down by 53% to 198 lakh tons from 444 lakh tons of the previous year, due to extensive buying by the private players. Government buying stood at 96 lakh tons from 132 lakh tons of the last year. Some of the leading players who exported wheat include ITC Ltd, Patanjali Ayurved, Cargill, Adani and others.

Demand sectors for wheat

Wheat is a staple crop in many Asian countries and other parts of the world. Wheat almost accounts for 20% of world’s calories. It also provides nearly a similar proportion of dietary protein to almost 2.5 billion people in developing economies. Wheat milling business provide products such as whole wheat flour, all-purpose flour, semolina, wheat bran, wheat germ, wheat grits etc. which are utilized in baking industries, animal feed industries, bio-ethanol production, food additives manufacturing, pharmaceutical/nutraceuticals and various other applications. On the other hand certain constraints such as gluten allergy and sensitivity observed among people have an impact on the consumption of wheat. It is seen thatIndia’s wheat flour production volume came down to 1.4 million metric tons in 2021-22 from 1.50 million metric tons of previous year.

There are many varieties that are used for different products such as hard-durum varieties, soft varieties, spelt varieties etc. In the past 15 years, global wheat consumption has recorded over 25% rise. Wheat and its by-products including semolina, flour, bran etc. are widely used. Different flour types such as bread flour, cake flour, durum flour etc. are used in various products. Wheat products include baked goods such as breads, biscuits, cakes and muffins, noodles, pasta etc. and beverages like wheat beer.

Wheat use across sectors in India

Novel products of wheat

Wheat Germ oil: Wheat germ oil is present at 2-3% levels in the wheat germ. Wheat germ oil contains natural antioxidants Vitamin E and essential fatty acids due to which it is used as cooking oil, in skin care products and nutraceuticals. India’s wheat germ oil market is growing at a CAGR of 7% during 2021 and can offer diverse opportunities for the industries.

Hydrolyzed wheat protein: It is derived from wheat through acid or enzyme hydrolysis, and used into foods as flavour enhancer. Itis also used in skin care products and others. Its market is a growing one with a CAGR of 4.8 for India in 2021.

Wheat gluten: Wheat gluten due to its elastic and textural properties in food its wide usage is into bakery products, breakfast cereals, pasta, batter premixes, nutritional snacks etc. It is used in aquaculture, and poultry feed products due to its hydration properties. Global wheat gluten market is growing at a rate of 8.21% during 2021 and a similar trend is likely to be anticipated for India.

Beverages: Non-alcoholic and beer like beverages are manufactured from wheat grits, malt etc. These products are in use in Italian markets and are likely to growin other regions in immediate future.

Wheat bran proteins: Wheat bran is majorly sent for animal feed uses, while it comprises of almost 18% of wheat proteins. It acts as a source of bio-peptides and novel nano-materials for industrial applications.

Indian scenario for wheat trade and usage

F1rst’s market sources indicate that 12-15% of the milled volumes (in total 1.4 million metric tons) in 2021-22 are used by the breads, biscuits, and bakery goods manufacturing industries. Around 1-1.5 lakh tons went into pasta style products and other confectionery industries. Almost 14-15 lakh tons went for feed usage. Bread and biscuits are the major products in Indian markets, with noodles, cakes and pasta occupying relatively smaller proportions.

Source: F1rst based on Analysis

Global scenario for wheat trade and usage

Asia-Pacific comprising Bangladesh, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Thailand, and Vietnam accounted for a major share in the consumption of bread, noodles, pasta, and other wheat-based products. In the year 2021, Bread and noodles had global production of 16852 metric tons and 14224.2 metric tons, respectively.

Legislation and Regulatory scenario in India

India currently imposes about 40% duty on wheat imports. India also has strict policies in wheat procurement and allocation of Minimum Support Prices. This is also in the view of welfare support programmes and supplies to combat poverty of countries in need.

According to Food Safety and Standards Authority of India (FSSAI), cereal and cereal products including atta, maida, semolina shall adhere to suitable food product additives and contaminant regulations apart from below standards.

FSSAI regulations for Wheat grains

Physico-chemical parameters including moisture content, aflatoxin content, uric acid and extraneous matter shall be within specified limits given by FSSAI. Samonella shall be absent in 25 g.