April 5, 2010
 

India to continue with wheat export ban

India, the world's second-largest wheat grower, has put off a decision to lift the ban on grain export until June, despite bulging inventories and diminishing storage space.

It would be ridiculous to export wheat when international prices are lower than domestic prices, a farm ministry official said.

Considering global wheat prices - about INR8,500 (US$190) a tonne - are much lower than India's, which is INR11,800 (US$264) a tonne, the government will have to dole out an export subsidy or pay the difference to enable exports.

"The government does not want to incur such additional costs when stocks are manageable," the senior official said.

The country expects to harvest a record wheat crop in 2010, slightly more than last year's all-time high of 80.6 million tonnes, amid concerns over storage space constraints.

The country's grain holdings are more than double from a year ago. Its wheat reserves are about 18.4 million tonnes, against the current buffer requirement of four million tonnes, while rice stocks stand at 26.9 million tonnes, against a buffer target of 12 million tonnes.

India's silos are grossly inadequate for its swelling grain reserves with the total shortfall in warehouses estimated at eight million tonnes, according to a note prepared by the standing committee on food and consumer affairs. The government hopes to make space for oncoming stocks by hiring private warehouses and streamlining reserves.

Agriculture minister Sharad Pawar had earlier said that a panel of ministers would consider lifting ban on wheat exports but ruled out any immediate decision.