India on the Brink of Record Wheat Harvest: Unpacking the Export Ban and Procurement Efforts

As India stands poised for its third consecutive record wheat harvest in the 2025-26 marketing year, with projected output reaching 115 million tonnes, the nation is grappling with the complexities of managing domestic supply and the ongoing export ban. This season's bumper crop is credited to record planting and favorable weather conditions across major wheat-producing states like Uttar Pradesh, Madhya Pradesh, Punjab, and Haryana. However, despite these promising yields, India is unlikely to lift its export ban, which has been in place since May 2022, as concerns over domestic price inflation persist.

Background and Context

The export ban on wheat was initially imposed due to smaller-than-expected harvests in previous years, rising food inflation, and low government wheat procurement levels under the Minimum Support Price (MSP) program. This move aimed to ensure domestic food security and stabilize prices within the country. Despite improved crop conditions, the fear of price spirals and supply constraints continues to deter policymakers from reconsidering the ban.

Key Factors Behind the Record Harvest:

• Increased Sowing Area: Wheat sowing has expanded significantly, with a notable increase from 31.56 million hectares last year to 32 million hectares this season.
• Favorable Weather Conditions: Adequate moisture levels and favorable temperatures have contributed to robust crop growth, particularly benefiting major wheat-producing states.
• Absence of Major Diseases: The lack of yellow rust and other diseases has further bolstered crop health and potential yields.

Procurement Efforts for the 2025-26 Season

Government agencies, including the Food Corporation of India (FCI) and state government entities, have commenced procurement operations on a strong note for the 2025-26 marketing year. The goal is to purchase 31 million tonnes of wheat, primarily from Punjab, Haryana, Madhya Pradesh, Uttar Pradesh, Rajasthan, and Gujarat.

Procurement Highlights:

• Early and Robust Arrivals: Wheat arrivals in key markets have been robust, with over 3.8 million tonnes reported so far—more than double the amount from the same period last year.
• Minimum Support Price (MSP): The MSP for wheat has been set at Rs 2,425 per quintal for the 2025-26 season, a 6.59% increase from the previous year's price.
• Procurement Targets by Region:
• Punjab: 12.4 million tonnes
• Haryana: 7.5 million tonnes
• Madhya Pradesh: 6 million tonnes
• Uthar Pradesh: 3 million tonnes
• Rajasthan and Gujarat: Smaller contributions from these regions

The Export Ban Conundrum

Despite the promising harvests, India remains hesitant to lift the export ban. This caution is driven by concerns over domestic inflation and supply pressures. The virtual ban on exports, except for limited exemptions for neighboring countries, is expected to continue as long as domestic price volatility remains a challenge.

Challenges and Considerations:

• Inflation Concerns: Sharp increases in wheat prices over recent years have been a significant concern, with retail inflation in wheat reaching 8.8% in January 2025.
• Global Market Dynamics: Despite relatively weak global wheat prices, high import duties of 40% deter potential imports, limiting the government's flexibility in managing domestic supply.
• Geopolitical Considerations: Exports to neighboring countries are allowed to support regional food security, aligning with geopolitical interests.

Implications for Domestic and Global Markets

The combination of record production and export restrictions has profound implications for both domestic and international markets.

• Domestic Market Impact:

• Supply and Demand Balance: Increased production should stabilize domestic supplies but may struggle to match demand if export restrictions persist.

• Price Management: The government will need to balance MSPs with market prices to ensure fair returns for farmers and keep inflation under control.

• International Market Impact:

• Global Wheat Prices: India's export ban could influence global wheat prices, potentially driving them higher if other producers cannot fill the supply gap.

• Trade Dynamics: The export restrictions could reshape trade dynamics, potentially benefiting other wheat-exporting nations like Russia and Australia.

Conclusion

India's record wheat harvest in 2025-26 signals a positive trend for food security and agricultural productivity. However, the ongoing export ban highlights the delicate balance between domestic supply management and geopolitical considerations. As the country navigates these challenges, policymakers must ensure that domestic prices remain stable while exploring opportunities to enhance supply stability without compromising on food security goals.

In the broader context of global agriculture, India's leadership in wheat production underscores its potential as a significant player in the international market. Yet, the maintenance of export restrictions suggests a cautious approach, prioritizing internal stability over external trade opportunities.

Given these dynamics, the agriculture sector in India is set for significant transformations, both in terms of production capacities and policy orientations. As the government continues to navigate these complexities, the outcomes will be closely watched by stakeholders across the globe.