May 11, 2012

India likely to ship wheat from government stocks

In order to free up space for an ongoing harvest, India is looking into the possibility of exporting the grain from federal stocks, Food Minister K.V. Thomas said Thursday (May 10).

India inventories of food grains, including wheat, swelled to 71.1 million tonnes as of May 1, well above the country's total storage capacity of 63 million tonnes. Excess inventories are being stored in the open and are vulnerable to spoilage.

Stocks started piling up with a bumper harvest in the crop year ended June 30. India, the world's second-largest producer, lifted a ban on wheat exports that had lasted for around three years in September. Wheat output in 2011-12 is expected to reach a new record of 90.23 million tonnes.

Prime Minister Manmohan Singh set up a panel of experts early this month to suggest ways to clear stocks more quickly, such as by earmarking more for subsidised sales to the country's poor and promoting increased exports.

Thomas said on the sidelines of a conference Thursday that India is considering wheat exports to Iran and other Middle Eastern countries, Pakistan, Afghanistan and some African countries, mainly through government-to-government deals. Provision of incentives for wheat exports by private traders is also being considered, he added.

"There is a great possibility of exporting wheat to Iran as well as other Middle East countries, and this we will strive to do in the next two months," said a food ministry official.

Faced with sanctions, Iran is keen to buy wheat from India, provided the South Asian country is able to supply grain free from traces of fungal disease found in its breadbasket northern region. An Indian team plans to visit Iran soon to address Tehran's concerns on shipments from India.

Out of around 10 million tonnes of wheat that the government may consider for exports, it could look at shipping around four million tonnes to Iran.

Private wheat shipments have been slow despite the removal of export restrictions, as the government's guaranteed minimum price is higher than prevailing international prices, which have fallen due to a global surplus.