May 7, 2012

 

India possibly to ship 10 million tonnes wheat from federal stocks

 

 

In order to free up storage space before the next crop is harvested, India is exploring the possibility of exporting as much as 10 million tonnes of wheat from federal stocks, senior government officials said Friday (May 4).

 

Moreover, with the domestic currency weakening further in recent days, the government thinks this may be a good time to push exports. India lifted all controls on wheat exports in September after restricting shipments for three years, but the going was slow for several months as local prices were higher than in the international market.

 

Among the potential markets being eyed is Iran, which faces western sanctions and has lately turned to Australia for securing grain supply.

 

The success of India's efforts will hinge on a number of factors such as price parity as well as the final views of a panel set up last week by the Prime Minister to look into the management of bulging stocks.

 

"Exports are surely one of the options we are considering besides raising allocation of grains for subsidised sales and offloading stocks at lower prices in the domestic market. We will have to closely look at the three options as each involves a financial implication," a senior official at the food ministry said, on condition of anonymity.

 

Officials said no time frame has been set for completing the shipments. India's grain stocks were at 53.3 million tonnes on April 1, more than double the buffer stock requirement. Stocks are expected to rise to 75 million tonnes by June 1 whereas the total storage capacity in the country is estimated around 63 million tonnes.

 

India, the world's second-largest wheat producer, is expecting a record output of 90.23 million tonnes in the current crop year through June.

 

"If wheat has to be exported from government stocks, it may involve an estimated subsidy of INR56billion-77 billion (US$1.04 billion-1.4 billion), which we will have to ensure is not in any violation of international norms," because the government had originally bought it from farmers at higher prices, a second official said.

 

Food Minister K.V. Thomas declined to comment saying all these issues are being discussed by the panel headed by C. Rangarajan, chairman of the prime minister's Economic Advisory Council.

 

Indian authorities expect Iran to buy up to four million tonnes of wheat if ongoing issues with Karnal Bunt, a fungal infection in wheat, are sorted out.

 

"We will soon send a team of officials to convince Iranian authorities that we can provide them fungus-free wheat from provinces such as Madhya Pradesh," an official at the Ministry of Agriculture, told Dow Jones Newswires.