May 12, 2008

  

India unlikely to import wheat for 2007-08
 

 

A record wheat harvest for the 2007-08 marketing year combined with larger government wheat procurement and higher carryover stocks caused India's Agriculture Minister to rule out government wheat imports this marketing year, according to a USDA attache report posted Friday (May 9, 2008) on the Foreign Agricultural Services Web site.

 

India's 2007/08 total food grain production, which includes the wheat crop just harvested, and rice, coarse grains, and pulse crops harvested last fall and this spring is pegged at a record 227.3 million tonnes, according to India's Ministry of Agriculture.

 

The Agriculture Ministry is attributing the production increase to favorable growing conditions for the winter crops and greater distribution of improved seeds to farmers, resulting in higher yields, despite a half a million hectare decline in planted area.

 

The final estimate of the crop production will be released only by the end of the year.

 

Most of the increase in wheat production this year was reported in Gujarat and Madhya Pradesh, whereas the major wheat growing states of Uttar Pradesh, Punjab, and Haryana did not record any significant increase in production.

 

Increased production, a higher government support price, and the GOI's aggressive wheat procurement strategy helped the government to procure more wheat this year.

 

Procurement through May 1 was 15.4 million tonnes, compared with 8.2 million tonnes procured during the corresponding period of MY 2007/08.

 

Total MY 2008/09 wheat procurement is likely to touch around 16.5 million tonnes against last year's 11.1 million tonnes and the record procurement of 20.6 million tonnes in MY 2001/02.

 

Although most of the procurement this year was from Punjab (8.3 million tonnes) and Haryana (about 4.7 million tonnes), other states such as Madhya Pradesh, Uttar Pradesh, and Rajasthan also contributed significant quantities to the central pool.

 

Private wheat purchases, particularly from the major surplus states of Punjab and Haryana, were negligible as private traders were afraid that the government would take disciplinary action against them.

 

Farmers were also generally satisfied with the higher government support price this year (Rs. 10,000 = US$250 per ton), although they could have received a much higher price had there been no restriction on wheat exports and the private trade was permitted to operate domestically without restrictions, the USDA said.

 

With carryover stocks of 5.8 million tonnes on April 1, 2008, (compared with 4.6 million tonnes a year ago) and a likely government procurement of 16.5 million tonnes, total wheat availability from the government would be around 22.3 million tonnes, which is more than adequate to meet the PDS requirement under normal conditions (12 to 14 million tonnes).

 

However, wheat prices in the open market are likely to be higher this year, particularly during the lean period of October 2008 to March 2009, as the larger wheat procurement by the government has significantly reduced wheat availability in the open market.

 

To contain the likely price rise, the government may be forced to distribute more wheat through the PDS and even through open commercial market sales at below market prices in the south, the report said.

 

The tight rice supply situation will also force the government to distribute more wheat, which would result in larger than normal offtake from government stocks in MY 2008/09.

 

In view of the likely situation of lower import, the USDA has revised India's MY 2008/09 wheat import forecast downward to 500,000 tonnes from the earlier forecast of 2 million tonnes.

 

Although Indian wheat prices are currently the cheapest in the world and India could have emerged as a major exporter of wheat in 2008, the government has banned wheat exports due to fears of food inflation.