November 17, 2006

 

India may ban corn exports

                        

                         

India is considering imposing a ban on corn exports, Commerce and Industry Minister Kamal Nath said Friday (Nov 17). 

 

Nath said the agriculture ministry is examining corn production data to check whether there is a shortfall in local supplies.

 

Local corn prices are high, and this has hit the poultry industry, which relies on corn for most of its feeding needs.

 

India is a regular exporter of small volumes of corn to neighbouring Sri Lanka, Nepal and Bangladesh. Earlier this month, a cargo of around 15,000 tonnes was also shipped to a Malaysian port.

 

Corn prices in north India have moved up sharply to  INR9,000-INR9,500 (US$200-US$211.7) a tonne in Delhi from INR7,450-INR7,700 (US$166-US$171.5) three months ago.

 

The prices are rising despite the local winter-sown crop being harvested, due to tight supplies and a lower on-year crop.

 

Starch manufacturers who use corn as a raw material and poultry producers have been pressing for a ban on exports and calling for duty-free imports of corn. India imposes a 15 percent import duty on corn.

 

According to government estimates, India's summer-sown corn output, currently being harvested, is expected to have declined to 11.43 million tonnes from 12.41 million tonnes in the year-earlier period.

 

India also normally harvests around 2.5 million tonnes of corn in April from the winter plantings that are yet to gather momentum.

 

India's annual corn consumption is a little over 14 million tonnes, said Amit Sachdev, a poultry industry analyst who also represents the US Grains Council.

 

"If exports are banned and imports made duty-free, it will definitely have a softening impact on price sentiments," said Sachdev.

 

Prices of corn, wheat, pulses, sugar and edible oils are being monitored by the government on a daily basis to keep a check on inflation.

 

Currently, exports by India of pulses and sugar are banned until Mar 31, 2007.

 

Inflation in India accelerated to 5.30 percent on year in the week ended Nov. 4, from 5.09 percent the previous week, data issued Friday by the Ministry of Commerce and Industry showed.

 

The central bank estimates that inflation for the current fiscal year that began April 1 will range between 5.0 percent and 5.5 percent.

 

Any upward price movement in items such as corn, wheat, pulses and sugar affect inflation, as primary commodities have a 22.02 percent weighting when calculating the wholesale price index.

 

Tackling prices of these commodities, and thereby inflation, has of late become a major concern for the government, as the issue is also politically very sensitive.