March 13, 2007

 

India to keep track of large wheat purchases by traders

 

 

India's federal government has made it mandatory for all traders in wheat to submit details of purchases made in the next financial year, if they buy more than 50,000 tonnes, Food Minister Sharad Pawar said Monday (Mar 12).

 

Analysts say the government fiat is aimed at minimising or even preventing wheat imports altogether.

 

"Any company or firm or individual which purchases wheat beyond 50,000 tonnes shall furnish to the federal government a return indicating its details," Pawar told lawmakers in Parliament.

 

He said up to Aug 31, all provincial governments are also permitted to impose a limit of their own on stocks of wheat that can be held by traders.

 

The government buys wheat from farmers at a set intervention price and then sells it to consumers at subsidised rates. Last year, traders purchased wheat from farmers at prices higher than that of the government. This led to a shortfall in government's procurement to run the subsidised sale programmes which had to be met through imports of a whopping 5.5 million tonnes.

 

In India, the cold arithmetic of wheat trade is such that any shortfall in government's local procurement from farmers at a predetermined intervention price, results in proportional volume of imports to run subsidised sales programmes.

 

As a result the government is keen to maximise its own purchases of wheat. Government and industry officials say this year trading companies have already been requested (by the government) to avoid buying wheat from Punjab and Haryana, the two provinces that contribute the largest volumes to the government granaries.

 

However, Pawar denies any such move.

 

"In a democracy we can't stop anyone from buying wheat," he said last week.

 

It is in this backdrop that the government order to keep track of all purchases beyond 50,000 tonnes has been issued.

 

However, analysts say local wheat trade is undertaken by millions of farmers and traders with only a handful of companies and individuals having the capacity to buy more than 50,000 tonnes.