Govt plans to export 100,000 tonnes of wheat as stocks swell to new highs

Sanjeeb Mukherjee / New Delhi Jun 14, 2012,
Business Standard
India’s grain storage problem continues, even as the government mounts a strategy to reduce inventories before the monsoon enters the northern parts of the country in July. Officials said work in on for a note to the cabinet to liquidate around 1,00,000 tonnes of wheat from central stocks, following the suggestion by a committee headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council. The panel had advised subsidised export of two million tonnes of wheat.

In the first phase, the trading arm of the government, State Trading Corporation, floated an open tender to export wheat from the central pool and received around seven bids. The highest was for $228-230 per tonne (around Rs 12,850 per tonne, assuming the current exchange rate of Rs 55.8 against a dollar. The bid was around Rs 5,300 a tonne less than the cost incurred in procurement, storing and transportation of wheat.

“The cabinet will discuss the price quoted by various bidders and decide on whom to award it to,” officials said. The Rangarajan committee had estimated the government would have to bear an additional subsidy of almost Rs 1,500 crore if it wanted to export grain, particularly wheat, from the central pool as the Centre’s expense of purchasing, storing and transporting the cereal was much higher than the probable rate that it would fetch in the international market.

The panel also recommended supplementing subsidised exports through selling grain at cheap rates in the home markets.

Foodgrain stock in the central pool is now estimated to be 82 million tonnes, much more than the available storage space of 68 mt.

Grain stocks till last week were almost 150 per cent more than the quantity mandated in the buffer and strategic reserve norm set by the government.

According to official data, wheat procurement till June 10 this year is already more than the total purchases made in the 2011-2012 crop marketing season that runs from April to March, while rice purchases are already more than the norm.

Till last week, government had purchased almost 36 mt of wheat from farmers for the central pool, 28 per cent more than the total procurement of 2011-2012.