May 8, 2006


India's wheat imports seen at 5.5 million tones in 2006/07



India's government may import 2 million tonnes more wheat in the current financial year to Mar 2007, in addition to 3.5 million tonnes already decided, a senior government official said Friday (May 5).


"Our local wheat purchases are much below expectations and further imports may be resorted to, though a final decision is yet to be taken," the official told Dow Jones Newswires.


He said the government may have to import more wheat to run its subsidised sale programmes and ensure local prices remain under control, but said farmers are not being discouraged from sowing wheat for the next season.


Since Apr 1, when local harvesting formally began, the government has purchased only 9.06 million tonnes of wheat from the farmers, down from 13.9 million tonnes in the year-earlier period.


India is currently importing wheat through government-owned State Trading Corp of India Ltd.


Traders and the government attribute the shortfall in local government wheat purchases of around 5 million tonnes to fewer market arrivals, more purchases by private traders, who offered rates higher than the government-set intervention price of Rp700/100 kg, and stock retention by farmers in anticipation of higher prices in later months.


The government is exploring several options to bridge the shortfall, including purchasing from the open market and substituting wheat with rice for its subsidised sale programmes, the official said.


In the current financial year, the government requires around 15.6 million tonnes of wheat--at the rate of 1.3 million tonnes a month--to run its subsidised sale programmes and welfare schemes.


This requirement can be reduced by around 2 million tonnes overall by substituting wheat with rice, the official said.


However, the government also has to keep a buffer stock of 4 million tonnes to meet exigencies.


The current financial year began Apr 1 with a stock of only around 2 million tonnes. After factoring in imports of 3.5 million tonnes and likely local purchases of 10 million tonnes this year, a total of 15.5 million tonnes will be available to the government.

"A back-of-the-envelope calculation shows our requirements up to next March, including a buffer stock, will be 17.5 million tonnes and a further import of 2 million tonnes may be required," the official said.


However, the government has also pinned its hopes on farmers and traders releasing their stocks in the market later this year to improve availability.


"Output seems to be normal this year--between 72 and 73 million tonnes--and sooner or later those holding back stocks will have to come forward and make sales," the official said.


Another option for the government is to cut the quantity of monthly food grains sales in its subsidised sales programmes, currently 35 kg for each household, he said.


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