India's grain mountain grows despite push for exports

Feb 26 2013, 11:32 IST
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A dumper unloads wheat as a crane loads onto a cargo ship at the Mundra port in Gujarat September 24, 2012. (Reuters) A dumper unloads wheat as a crane loads onto a cargo ship at the Mundra port in Gujarat September 24, 2012. (Reuters)
SummaryIndian farmers will begin to harvest sixth consecutive wheat crop expected to exceed demand.

year as adverse weather conditions reduced harvests from Australia and Russia, the world's second and third largest exporters. Wheat was the best-performing commodity on the Thomson Reuters-Jefferies CRB index in 2012.

Storage space of 47 million tonnes can accommodate less than half of the expected stockpiles, and the rest will sit under tarpaulins in the open.

Wheat consumption and exports from government warehouses will likely account for around 82 million tonnes of India's 92.3 million tonnes of output in 2013. Additional 2 million tonnes of exports by private traders will leave a surplus of around 8 million tonnes.

India produced a record 105.31 million tonnes of rice last year, while domestic consumption stood at around 90 million tonnes.

The government has so far given permission for 4.5 million tonnes of wheat exports from state storage in 2012/2013. It will likely raise that to 6 million tonnes but beyond that the permits may be no more than a paper solution as there is no real capacity to ship more out unless the bureaucrats push for wheat to have priority over rice exports.

A food ministry official, who declined to be identified, said his ministry was pressing the cabinet to allow India to export as much as possible while prices are firm.

RISK FROM PESTS

India's grain stockpile has grown rapidly over recent years, thanks to near-perfect weather and the government's commitment to buy the entire quantity of wheat and rice brought to market in a bid to support farmers.

Wheat stocks alone will be about 64 million tonnes in June, 16 times the state target for the time of year, said two government sources responsible for grain purchases and storage who declined to be identified as they are not authorised to speak to the media.

As India gears up to buy a record 44 million tonnes of wheat from the latest harvest, the Food Corporation of India has been building platforms of wood and cement for storage. These are no match for purpose built grains warehouses and silos and leave supplies exposed to rodents and the weather.

In previous years, images of rotting grains in faded bags has stoked stinging criticism of the government which is now under pressure to trim stockpiles.

PORT CONGESTION

"Port congestion is an issue as cargoes have to wait, adding to exporters' costs and delaying deliveries," said Sanjeev Garg, chief executive at agricultural products trading company CommCorp International in New Delhi.

Even though Indian wheat exports account for a

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