January 6, 2009

India's grain export trade is upset that wheat exports have not fully reopened despite favourable domestic conditions.

Traders said the conditions that prompted grain export bans and restrictions no longer exist, as supply is sufficient and prices are under control. Government stocks are also adequate to meet emergency needs, traders said, pointing out that state reserves may be as much as 9 million tonnes.

Competitors such as Thailand, Vietnam, Pakistan and Myanmar have benefited greatly from India's continued grain restrictions, and have also resulted in India losing credibility as a reliable supplier, according to Dr VK Bhasin of Commodity Today.

The loss of credibility has hurt domestic farmers and several export houses, said Bhasin.

India's next wheat acreage is steadily increasing to over 26 million hectares, and if weather conditions are favourable, farmers may harvest 75 million tonnes. In view of this possibility, the government will have to liquidate excess stocks which are incurring huge carrying costs, traders said.

Trade representatives also said inflation rate has been falling steadily, and food concerns have eased therefore it is time for the government to review its restrictive grain export policy.