New Delhi: The war in West Asia is complicating India’s return to global wheat markets but also redrawing trade routes in favor of its eastern heartland. As sea-bound shipments become more expensive and uncertain, exporters are turning to nearby land border markets such as Nepal and Bangladesh – using faster and more reliable road and rail routes in a move that could support better price realization for farmers in Bihar and Uttar Pradesh, three people directly involved in the process told Mint.
This comes against the backdrop of a decision by India, the world’s second-largest wheat producer after China, to reopen exports of the staple food grain after nearly four years of curbs when the rabi harvest is underway. The country’s wheat production in the current fiscal year stands at a record 120 million tonnes.
While Uttar Pradesh produces around 36 million tonnes of wheat annually, the highest in the country, Bihar harvests about 8 million tonnes and ranks sixth. According to agriculture department data, Uttar Pradesh accounts for about 30% of the country’s total wheat crop, while Bihar contributes nearly 6%.
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“Farmers from Bihar and Uttar Pradesh are in an advantageous position to get better prices for their wheat as they are geographically close to markets like Bangladesh and Nepal,” said Bimal Kothari, Chairman of India Pulses and Grains Association (IPGA).
“With global wheat supplies from Ukraine and Russia due to the ongoing war and the impact of Red Sea shipping as well, international prices have strengthened, creating an opportunity for farmers in these regions to achieve premium yields,” Kothari said.
These export premiums are estimated at 5-10% of the domestic mandi rates.
“As border states, Bihar and Uttar Pradesh have the advantage of supplying wheat directly to neighboring countries (such as Bangladesh, Nepal and Bhutan) through road and rail routes, which reduces dependence on sea routes and helps exporters respond quickly to demand,” he said. These countries used to buy food grain mainly from the Black Sea region.
Heat can affect yields
However, heat conditions could affect yields and remain an important factor to monitor, Kothari warned.
Uttar Pradesh and Bihar have a geographical edge over other major producing states. “As transport costs play a critical role in export competitiveness, moving wheat from surplus northern states such as Punjab and Haryana to ports requires significantly higher transport costs. In contrast, eastern states have a natural logistical advantage due to their proximity to Bangladesh, which allows shipments to move faster and more cost-effectively,” said Binod Anand, a member of the government’s procurement committee at MSP, which guarantees a minimum price.
Indian exporters are expected to target the Bangladeshi market, which remains one of the largest wheat importers in the region.
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The total consumption of wheat in Bangladesh is around 7 million tonnes, of which about 6 million tonnes is covered by imports. In Nepal, import requirements are estimated at 1.0-1.5 million tonnes out of a total consumption of around 2 million.
According to traders, India’s geographical advantage allows shipments from eastern states to reach Bangladesh quickly and at significantly lower shipping costs compared to shipments from distant origins.
“Bangladesh is likely to emerge as a lucrative export destination for Indian wheat, with farmers in eastern Uttar Pradesh and Bihar expected to benefit from proximity and lower transport costs,” Navneet Chitlangia said.
Farmers in districts bordering Bangladesh, particularly eastern Uttar Pradesh and Bihar, are likely to see better price realization as exporters buy wheat closer to ports and land border crossings. Lower logistics costs increase the competitiveness of their production and create new market opportunities outside domestic purchasing channels.
Rising prices
Global prices rose even before the US-Israel-Iran war began in late February. The FAO cereal price index averaged 108.6 points in February, up 1.1% from January but still down 3.5% from a year ago. World wheat prices rose 1.8% month-on-month in February, boosted by reports of frost and increased chills in wheat-growing parts of Europe and the US. “Logistics disruptions in the Russian Federation and ongoing tensions in the Black Sea region also contributed to the increase,” said an FAO report published on March 6.
India’s traditional seaborne wheat export markets include Bangladesh, the largest buyer, along with Indonesia, the Philippines, Vietnam, Sri Lanka and Gulf countries such as the United Arab Emirates. During global upheavals such as the war in Ukraine, exports also expanded to Egypt and Turkey.
Read also | India is considering resuming exports of wheat products after record production estimates
The geopolitical upheaval came just as India confirmed plans to resume wheat exports. Almost four years after a blanket ban on wheat exports was imposed in May 2022, the government on February 13 reopened supplies of up to 2.5 million tonnes (mt) of the grain and 500,000 tonnes of its processed products, citing comfortable domestic stocks and a favorable output outlook.
Before the export ban, India was a major exporter of wheat with shipments worth $2.12 billion in FY22 and $1.52 billion in FY23. However, exports fell sharply after the arrival of the curbs, falling to $56.74 million in FY24 and falling further to just $2.03 million in FY25, reflecting a near-halt in supplies.
According to a Global Trade Research Initiative (GTRI) report, ongoing unrest in the Persian Gulf region has threatened India’s exports of agricultural and food products worth $11.8 billion. This represents 22% of India’s total farm exports.
Queries about the development sent to spokespersons for the state governments of Bihar and Uttar Pradesh, as well as spokespersons for Bangladesh and Nepal, remained unanswered as of press time.
