May 19, 2006

 

India may consider additional tender to import wheat 

 

 

India may consider an additional tender to import wheat if it is unable to get the desired amount of specified quality from a recent tender issued by State Trading Corp of India, or STC, a senior company official said Friday (May 19).

 

In the tender issued earlier this month, STC sought to buy 3 million tonnes of wheat on behalf of the federal government for delivery in the four months to October.

 

However the eight bids received so far added up to only 2.6 million tonnes.

 

Some of the bids were not accompanied by a mandatory bid-bond of either US$3 million or 3 percent of the value of the bid, whichever is higher.

 

The tender came under criticism from wheat-supplying nations with some international wheat suppliers such as the US and Australia calling India's financial and quality conditions for the bidding too stringent.

 

"It seems only one of the eight bidders has offered to sell wheat of US origin, and that too, in a small quantity," the official told Dow Jones Newswires.

 

He said this is not surprising, and was expected, because of the maximum limit of 1,000 parts per billion, or ppb, set for the presence of the DON toxin in imported wheat in the tender.

 

Those offering wheat of US origin would have preferred the maximum limit for DON to be fixed at 2,000 ppb, the official said.

 

"It's unfortunate that the response has been very limited because it is difficult to supply wheat with such stringent specifications from not only the US but anywhere in the world," said Mark Samson, vice-president for South Asia of US Wheat Associates, a lobby group for US wheat growers.

 

Bidders have mainly offered wheat of Australian, European, Canadian and Russian origins.

 

"We did our best to relax norms compared to the previous tender for wider participation, but quality remains a concern for us," said the official.

 

The volume offered with a bid-bond added up to about 1.8-1.9 million tonnes, the official told Dow Jones Newswires.

 

"We will try to garner the maximum possible quantity from the current tender itself, provided the specifications set by us are met. Otherwise we can always exercise an option to import more through additional tenders," the official said.

 

The STC can also purchase amounts offered by other bidders and more, if they agree to match the lowest bid.

 

"The situation is quite fluid and there are several ifs and buts," the official said.

 

He said the price is only one of the issues under consideration and technical evaluation is also crucial when finalising offers.

 

India's federal government annually requires around 15.6 million tonnes of wheat to run its subsidised wheat-sale programme.

 

So far the government has purchased only 9.2 million tonnes from local farmers in the current marketing year to March 2007, while the harvest is almost complete.