NEW DELHI: The conflict between Russia and Ukraine is disrupting supplies of agricultural commodities and is likely to have a deep impact on India’s farm sector, said Crisil Research in its report released on Thursday.
Noting the situation as a “mixed bag” for India’s agri-trade, it said while the conflict creates an opportunity for wheat and maize exports, it is also set to have an adverse impact on the import bill of edible oils due to higher prices.
“Both the Black Sea nations are major suppliers of key commodities such as wheat, sunflower oil and corn. On its part, India is an exporter of wheat and a major importer of edible oils, including sunflower oil. Thus, while the conflict creates opportunity for exports, it is also set to have an adverse impact on the import bill due to higher prices,” said the report.
Crisil’s analysis comes at a time when several reports flagged how the Russia-Ukraine conflict will also adversely impact imports of fertilizers, creating a situation where farmers will have to face higher input cost during the Kharif (summer crop) sowing season if it prolongs longer. At a high 14%, India’s share in global wheat production is the same as the combined share of Russia and Ukraine. However, owing to higher domestic consumption, the country’s share in global wheat exports is a mere 3%.
Another commodity that is likely to see the impact is maize, of which Ukraine is the third-largest exporter.
“As exports from Ukraine decline, Indian maize will be able to take advantage,” said the report. It, however, said, “India’s gains in wheat and maize could well be squandered on edible oils, where the country is a major importer.”