February 11, 2008

 

India insists no need for wheat imports as foreign producers eye market

 

 

India, despite an expected 1-million tonne decline in wheat production, is defying analysts' expectations that it would have to import as much as 3 million tonnes of wheat and declaring it would not have to import wheat in the next crop marketing year.

 

Junior farm minister Akhilesh Prasad Singh said Friday India will not have to import wheat due to adequate stocks in government granaries.

 

Even though the government estimates wheat production would decline by 1.0 million tonnes to 74.81 million tonnes, the 5.3 million tonnes of wheat in buffer as on April 1 is more than the requirement of 4.0 million tonnes, Prasad told reporters on the sidelines of an industry event.

 

His statements were given further strength from Alok Sinha, chairman of Food Corporation of India, the main agency for procurement and storage of foodgrains.

 

India's government is confident of buying at least 15 million tonnes of wheat from local farmers in the crop marketing year that starts April 1, he said adding that the agency is hopeful of raising local purchases from farmers this year because of a hike in the market intervention price of wheat.

 

India bought around 12 million tonnes of wheat from farmers in 2007-08. Every year, India's federal government buys foodgrains at a fixed intervention price to provide for its subsidized food programs and also to maintain an adequate buffer stock.

 

Their remarks were disputed by Mark Samson, vice president of US Wheat Associates for South and Southeast Asia, who told reporters on the sidelines of the same event that India may have to import around 3 million tonnes of wheat.

 

India's wheat production is falling due to delayed sowing and inadequate availability of soil nutrients, he said a day after the government released expectations that wheat production could fall 1 million tonnes.

 

Samson said a slight improvement in the outlook is possible if the weather remains favorable in the next couple of weeks, but this would not be enough.

 

"India will have to continue needing wheat imports even in years to come to cover its shortfall in supply vis-a-vis demand and also to control food inflation," Samson said. India has contracted to import around 1.8 million tonnes of wheat in 2007-08 because of a fall in buffer stocks due to low procurement by state agencies.

 

On global wheat prices, Samson said that if everything goes well wheat prices might soften in the coming months.

 

"But, if any of the world's major importers or exporters face trouble then we are in for a bumpy ride in world wheat prices," Samson said.

 

Friday, CBOT May wheat broke through the psychologically significant US$11 a bushel barrier on strong global demand and historically low inventories.

 

Samson also said the US will export around 1.2 million tonnes of wheat in the three to four months.

 

"The country had targeted to export around 32 million tonnes of wheat in the year ending May 2008," Samson said, adding that by Jan. 24, it had entered into contracts to export 30.8 million tonnes. "So exporting another 1.2 million tonnes is not difficult."

 

However, he said the US was keen to restart wheat exports to India if it relaxes its phytosanitary requirements.

 

"We are selling the same wheat to Japan, and they too have stringent phytosanitary norms, so there is no reason why India can't buy that wheat," Samson said.

 

India purchased very limited quantities of wheat from the US in the last two years because of stringent phytosanitary norms.

 

Meanwhile, French wheat exporters are looking to sell wheat to India, provided the volumes are large enough, a senior industry official said Friday.

 

"We are studying the Indian market and it will make sense for us to export wheat if the requirement is more than 1 million tonnes," Francois Gatel, director of France Export Cereals said at the same event.

 

France exported around 250,000-300,000 tonnes of wheat to India in the marketing year that ended Mar. 31, 2007, mostly through state-run trading firms. However, this year it didn't offer any wheat for exports, as India total wheat imports fell to around 1.8 million tonnes because of high global prices.

 

It had imported around 6.5 million tonnes of wheat in 2006-07 through both private traders and state-run agencies.

 

France's wheat production in 2006-07 is expected to be around 31 million ton, less than its average annual production of 34 million tonnes. It consumes around 17-18 million tonnes locally, while rest is exported.

 

"France exports around 9 million tonnes wheat within the European Union, while the rest outside," Gatel said.

 

He said unfamiliarity of Indian consumers to French wheat is also a hindrance in aggressively pursuing exports to India.

 

Even as Indian officials are insisting there is no need for imports, they are not closing the door on exporters entirely.

 

"Although there is no need for wheat imports at least for the next two to three months because of comfortable stocks, but the federal government is keeping its options open," federal food secretary T. Nandakumar told reporters.

 

On domestic wheat prices, Nandakumar, the senior-most official in the federal food ministry, said despite projections of lower output, prices would remain stable in the marketing year that starts April 1.

 

"The government is fairly confident that prices would remain stable next year," he said.

 

Meanwhile, India's federal government is exploring the option of purchasing at least 300,000 tonnes of wheat from Kazakhstan in an effort to boost its buffer stocks.

 

"A team of senior officials from State Trading Corporation of India is currently in Kazakhstan to negotiate such a deal," the official who didn't wish to be identified told Dow Jones Newswires.