March 20, 2007

India government expected to procure more wheat in 2007
 

Following the Indian government's recent announcement of a Rs1,000/tonne (about US$22.77/tonne) bonus to farmers on the wheat purchase price, traders expect authorities to be able to procure more wheat in 2007 at the higher actual price of Rs8,500/tonne than last year.

In 2006, aggressive buying by private traders had led to the government procuring only 9.226 million tonnes of the targeted 16.207 million tonnes for the year.

In a statement to Press Trust of India, All India Grain Exporters' Association President D P Singh expects the government to take up much more supplies this year, even if it fails to achieve the 2007/08 marketing season target of 15.1 million tonnes.

Singh also said the market price of wheat is unlikely to register further gains as the government's wheat bonus announcement would prompt private companies to adopt caution in offering higher prices.  

Agriculture Minister Sharad Pawar said the State Trading Corporation would import up to 3 million tonnes of wheat if necessary. Additionally, the government will allow duty free wheat imports until end-2007 to avoid a shortage of supplies.