International prices will enable the government to halve export subsidy on wheat to less than Rs 500 crore in 2012-13
Sanjeeb Mukherjee / New Delhi Dec 02, 2012,
Business Standard
With India’s wheat exports from central pool picking up pace in the last few months and also fetching good returns in the international market, the government is hopeful of ending 2012-13 financial year with 20 million tonnes in stocks, same as the last year despite a 9.8 million tonnes rise in procurement.
This has wiped off the fears of huge losses that would have occurred as over 6 million tonnes of surplus wheat was stored in unscientific places around June, besides prompting the government to mull over building brand for Indian wheat in the global markets by continuously exporting it.
Also, international prices will enable the government to halve export subsidy on wheat to less than Rs 500 crore in 2012-13.
Wheat prices in the world markets started firming up from August onwards because of drought in the United States, the world’s largest exporter and also low production in Australia, Ukraine, Russia and Argentina.
Apart from clearing the export of 2 million tonnes of wheat in August, the government has also decided to offload around 7 million tonnes of wheat and rice in the domestic market. The decision to export wheat from the central stocks after almost 7 years was preceded by its decision to allow exports of wheat and non-basmati rice by private traders.
Officials said because of the strong response that Indian wheat got in the global market, the government is toying with the idea of regularly exporting wheat from the central pool to build the brand of Indian wheat in the global arena. However, this would be subject to available stocks at that point of time.
Of the 22 tenders floated by India to export around 2 million tonnes of wheat from central pool since August, all of them, barring one fetched a price of over $300 per tonne (Freight on board) (Rs 16,278 per tonne at an exchange rate of Rs 54.26 a dollar).
The highest price of $324 per tonne (Rs 17,580 per tonne at an exchange rate of Rs 54.26 per dollar) was fetched by a tender floated by PEC on November 26.
“The average price fetched by the wheat exported by government has been around $313 per tonne). The Food Corporation of India (FCI) has also relaxed its first in first out policy for grain and allowed export of newly procured wheat as well.
The high price that Indian wheat fetched in the international markets is estimated to halve export subsidy from an estimated Rs 1,275 crore to less than Rs 500 crore in the current financial year.
"Against a base price of $228 per tonne, India has managed to export almost all the wheat from the central pool at a price which is more than $300 per tonne. This clearly shows that Indian wheat is slowly commanding a premium in the international markets," a senior government official said.
Friday, government in-principle agreed to allow export of another 2.5 million tonnes of wheat from the central pool over the already cleared 2.0 million tonnes. “In total almost 4.5 million tonnes of wheat will be exported from the central pool if the latest proposal also gets cabinet clearance,” the official said.
Of the earlier approved 2 million tonnes of wheat, tenders for 1.83 million tonnes have already been approved while almost 1 million tonnes has already been shipped out.
“The government should continue to export wheat from central stocks in small tranches which would establish India as a reliable player in the global grain market,” a senior trader from global trading firm said.
Sanjeeb Mukherjee / New Delhi Dec 02, 2012,
Business Standard
With India’s wheat exports from central pool picking up pace in the last few months and also fetching good returns in the international market, the government is hopeful of ending 2012-13 financial year with 20 million tonnes in stocks, same as the last year despite a 9.8 million tonnes rise in procurement.
This has wiped off the fears of huge losses that would have occurred as over 6 million tonnes of surplus wheat was stored in unscientific places around June, besides prompting the government to mull over building brand for Indian wheat in the global markets by continuously exporting it.
Also, international prices will enable the government to halve export subsidy on wheat to less than Rs 500 crore in 2012-13.
Wheat prices in the world markets started firming up from August onwards because of drought in the United States, the world’s largest exporter and also low production in Australia, Ukraine, Russia and Argentina.
Apart from clearing the export of 2 million tonnes of wheat in August, the government has also decided to offload around 7 million tonnes of wheat and rice in the domestic market. The decision to export wheat from the central stocks after almost 7 years was preceded by its decision to allow exports of wheat and non-basmati rice by private traders.
Officials said because of the strong response that Indian wheat got in the global market, the government is toying with the idea of regularly exporting wheat from the central pool to build the brand of Indian wheat in the global arena. However, this would be subject to available stocks at that point of time.
Of the 22 tenders floated by India to export around 2 million tonnes of wheat from central pool since August, all of them, barring one fetched a price of over $300 per tonne (Freight on board) (Rs 16,278 per tonne at an exchange rate of Rs 54.26 a dollar).
The highest price of $324 per tonne (Rs 17,580 per tonne at an exchange rate of Rs 54.26 per dollar) was fetched by a tender floated by PEC on November 26.
“The average price fetched by the wheat exported by government has been around $313 per tonne). The Food Corporation of India (FCI) has also relaxed its first in first out policy for grain and allowed export of newly procured wheat as well.
The high price that Indian wheat fetched in the international markets is estimated to halve export subsidy from an estimated Rs 1,275 crore to less than Rs 500 crore in the current financial year.
"Against a base price of $228 per tonne, India has managed to export almost all the wheat from the central pool at a price which is more than $300 per tonne. This clearly shows that Indian wheat is slowly commanding a premium in the international markets," a senior government official said.
Friday, government in-principle agreed to allow export of another 2.5 million tonnes of wheat from the central pool over the already cleared 2.0 million tonnes. “In total almost 4.5 million tonnes of wheat will be exported from the central pool if the latest proposal also gets cabinet clearance,” the official said.
Of the earlier approved 2 million tonnes of wheat, tenders for 1.83 million tonnes have already been approved while almost 1 million tonnes has already been shipped out.
“The government should continue to export wheat from central stocks in small tranches which would establish India as a reliable player in the global grain market,” a senior trader from global trading firm said.
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