March 6, 2007

India open to wheat imports this year
 

 

India, the world's second biggest wheat producer, will not hesitate to import the grain again in 2007 if the government fails to buy from farmers what it needs for its buffer stocks, the India agriculture chief said on Monday (March 5).

 

Imports put pressure on the government with opposition politicians and farming groups complaining small producers hurting with the falling prices in domestic markets.

 

But officials say poor consumers must be protected.

 

The government buys grains at a fixed price from farmers to run welfare and other programmes.

 

The farm ministry is confident it can buy 15 million tonnes of wheat in 2007 after raising the price it offers farmers.

 

India ordered imports totalling 5.5 million tonnes in 2006 -- the first overseas purchases in six years--to shore up stocks hit by a poor harvest the year before, allowing the private sector to import a further million tonnes duty-free.

 

Pawar said last year's low procurement of 9.0 to 9.5 million tonnes against a target of 16 million "disturbed sentiments and pushed prices higher".

 

He said the government this year had raised the procurement price by 100 rupees to 750 rupees per 100 kilogrammes and was exploring whether to increase it further as farmers expecting something higher.

 

Pawar said private traders had made some small purchases from early wheat arrivals but had not paid a very high price. Wheat prices last year rose sharply, helping to fuel inflation, which hit a two-year high in early February, but have recently eased due to improved supplies and forecasts of a better crop this year, which will be harvested from March.

 

Currently market prices are hovering around 1,100 rupees (US$24.71) per 100 kg, about 70 rupees lower than a month ago.

 

The Forward Markets Commission, the market regulator, last week banned futures contracts on wheat and rice to help cool prices after criticism the trades were adding to price pressures.

 

Analysts described the move as futile and said only improved supplies would curb prices.

 

Pawar said future prices are not going up.

 

The government has appointed an expert panel to examine the impact of futures trading on prices, and it is scheduled to submit its report in two months.

 

The minister said favourable weather would lift production above the government's estimate of 72.5 million tonnes this year against 69.5 million tonnes in 2006.

 

Pawar said the government would be able to build a buffer of 4.5 million tonnes by April 1.

 

He added the government planned to build a sugar buffer, with the government subsidising mills' storage costs.

 

Pawar said he was in favour of bio-technology to boost crop production, provided environment and health concerns were properly addressed as he said the "whole world is going in that direction".

 

(US$1=44.52 rupees)