Sops for wheat exports in the offing?

VISHWANATH KULKARNI, THE HINDU BUSINESS LINE
NEW DELHI, MAY 10:
The Government is looking to incentivise exports of wheat as it seeks to trim the Central pool stockpiles to create storage space for new stocks.

Exports from India are at present unviable, as the price at which Government is procuring wheat is higher than the global price.

The Government had opened up wheat exports in September last, after a gap of three years. The export trend is sluggish with only 8.3 lakh tonnes being shipped out to countries like Bangladesh and West Asia.

“Exports have been going on without any sops. If an incentive of even Re 1 or Rs 2 per kg is offered, it will boost shipments,” an official said. The Food Ministry is initiating talks with the Commerce Ministry on incentivising wheat exports, the official added.

Wheat stocks stood at an all-time high of 38.19 million tonnes in the Central pool as of May 1, 2012 (see table), because of bumper harvest and brisk ongoing procurement in Punjab, Haryana and Madhya Pradesh.

GLOBAL PRICES

Global wheat prices are ruling at a low on account of surplus stocks. The Chicago Board of Trade (CBOT) futures for July 2012 are hovering around $6 a bushel (27.215 kg). At current exchange rate of Rs 53 to a dollar, the global wheat prices translate to around Rs 11,700 a tonne, lower than the minimum support price (MSP) of Rs 12,850 a tonne at which the commodity is being procured by the Government.

The surge in procurement in the current season has triggered storage concerns as rising stockpiles of wheat and rice at 71.21 million tonnes far exceed the current storage capacity of about 67 million tonnes. Procurement of wheat has crossed 27 million tonnes in the current season, which is about 5 million tonnes or 23 per cent higher than last year.

EXPORT WINDOW

Earlier, the Food Minister, Prof K.V. Thomas, said the Government was looking at options to allow wheat exports, a move that could help liquidate stocks and create storage space for the wheat procured in the current marketing season.

“Export is one of the options. A policy has to be formulated in consultation with the Finance and Commerce Ministry in this regard,” Mr Thomas told reporters on the sidelines of a conference here on Thursday. India could look at West Asia, Afghanistan, Pakistan and some African countries to export wheat through Government-to-Government deals, Mr Thomas said. The Centre is also considering allocating an extra 17.5 million tonnes of wheat to the States for distribution under various welfare schemes, Mr Thomas said.