Revised buffer stock norm may hit wheat export

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Mumbai, May 1: India’s wheat exports are likely to be minimal during April-March 2005-06 at 1.8 million tonne. The revised buffer stock norm is not likely to leave much room for exports.

The government of India’s (GoI) revised grain buffer stock norm stipulates a minimum 4 million tonne of wheat as of April 1, 17.1 million tonne as of July 1, 11.0 million tonne as of October 1, and 8.2 million tonne as of January 1.

Thus, there is unlikely to be much of an exportable surplus of wheat this year, considering the fact that the annual wheat requirement for the public distribution system is 16 to 17 million tonne in a normal year.

The possibility of India exporting large quantities of wheat in 2005-06 can be almost ruled out. However, depending on the world supply situation, prices and freight rates, small exports to neighbouring countries like Bangladesh and Sri Lanka and to the Middle East might continue, says Global Agriculture Information Network (GAIN) in its latest update. According to provisional government trade data, exports from April 2004 through January 2005 were around 1.5 million tonne, mostly to Bangladesh, the United Arab Emirates and Sri Lanka.

The improving political relationship with neighbouring Pakistan brings with it the potential to export Indian wheat to Pakistan. The opening of land routes will likely result in cheaper and faster Indian exports of commodities like wheat from the adjoining wheat-surplus state of Punjab to Pakistan.

The Punjab Marketing Federation, a state government agency involved in wheat procurement and storage, has sought GoI approval to export wheat to Pakistan. However, according to Indian Food Ministry officials, convincing Pakistan to purchase Indian wheat will be difficult. Pakistan has previously raised concerns about the quality of Indian wheat. With Punjab wheat priced at around $166 per tonne FOB at the border, it is doubtful whether Pakistan would be interested in Indian wheat.

GAIN has forecast 2005/06 (April-March) wheat production at 74 million tonne. The government has also unofficially revised its production forecast from 73 to 74 million tonne, due to favourable growing conditions during February and March. Some analysts are even expecting production to reach 75 million tonne.

Generally favourable weather conditions in northern India are benefiting wheat harvesting and marketing. These, for the most part, have been completed in other states. Under the price support operation, the central government is expected to procure increased quantities of wheat this marketing year.