August 19, 2004

Indian Mills Seek Total Ban On Wheat Exports

Caught in a situation of rising prices even while the supply is not so tight, flour mills in Karnataka, India, are seeking to ban wheat exports to neighbouring countries such as Bangladesh.

This move would ensure supply to millers at a reasonable price. However floating stock held by farmers and traders were being diverted for exports, resulting in the hardening of prices in the open market.

The situation has arisen in view of uncertainty over the availability of the surplus stock held by the Food Corporation of India (FCI). This has resulted in the open market prices of wheat jumping by Rs 100 to Rs 965 a quintal.

FCI had revised the price sold under the open market sales scheme to Rs 865 (which excludes the 1.5 per cent market cess levied by the State Government and other charges). This was also close to the open market price, said Mr Ashok Kumar Gupta, President of the Karnataka Roller Flour Mills Association.

The corporation's opening stock as of August 1 was 19 million tons. To curb the increasing prices, which the association apprehends would go beyond Rs 1,000 per quintal, the Government should announce the ban on exports by private sources by levying export duty. Moreover it should allow imports by millers at zero per cent duty, which at present is 50 per cent, he added.