March 8, 2006

 

US suggests changes to India's wheat import specifications

 

 

India is importing wheat at prices higher than the market rates because of stringent specifications on standards, to which changes should now be considered, a senior industry official said Tuesday.

 

Last week, India decided to import 500,000 tonnes of wheat from Australia's AWB at around US$179/tonne after floating a global tender.

 

"India could have saved money by having contract specifications less onerous and less difficult," Mark Samson, vice-president for South Asia, US Wheat Associates, told reporters on the sidelines of an industry seminar.

 

US Wheat Associates is a trade promotion body for American wheat.

 

Indian import specifications involve tolerance limits for insecticides and pesticide residues and the total absence of exotic weed seeds.

 

Some of the bidders in last week's tender added a risk premium of around US$35/tonne because of the tender specifications, said Samson.

 

According to traders, the US wheat was offered in the recent Indian tender for around US$215/tonne, cost and freight because of the difficult standards.

 

Traders expect India to import another 1.5 million-2.0 million tonnes of wheat this year if its output falls below current projections of 73.1 million tonnes.

 

Samson said the US could supply part of the future Indian demand at competitive rates if slight changes are made to future tender specifications.

 

But he added that the latest Indian government projection for 73.1 million tonnes of wheat output seems to be on the high side and talks with industry officials revealed unfavourable weather may have hit the soon-to-be harvested crop.

 

"If they do not import another 1.5 million-2.0 million tonnes this year, in addition to the 500,000 tonnes already contracted, India probably may not be able to meet its buffer stock requirements," he said.

 

Regarding the import standards, he said the exotic weed seeds listed in the Indian wheat import tender as unacceptable in the imported consignments are mostly absent in the US wheat.

 

"Weeds such as ergot are not a common problem in American wheat but to certify their presence as nil is near impossible for anybody," said Samson.

 

The testing methods for quality specifications are also different in the two countries.

 

Samson said if specifications were measured in the same way there would not be any discrepancies.

 

Another issue relates to pesticides and insecticides, which are not used for wheat in the US.

 

"There are many (pesticides) we do not use and so we would not test for them and therefore our government would not certify their absence," said Samson.