FCI wheat exports fetch R6,000 crore despite global glut

Written by Sandip Das | New Delhi | Updated: May 24 2013, 06:43am hrs
Notwithstanding the poor response to the Food Corporation of Indias (FCI) wheat export tenders over the last few weeks, attributed mainly to global oversupply, the corporation has earned more than R6,000 crore since it commenced shipping the grain from its excess stocks in September last year.

After the government gave its nod to ship 4.5 million tonne (mt) of wheat from FCIs excess stocks last year, the corporation has exported more than 3.6 mt of wheat through agencies such as STC, PEC and MMTC with an average price realisation of $ 313 dollar a tonne. FCI has floated tenders for 3.8 mt till now.

Exporters say that Indian wheat has carved out a market for itself, with countries such as South Korea, Ethiopia, Bangladesh, Yemen, Thailand and Indonesia key destinations for its shipments.

Out of these countries, more than one million tonne of wheat has been exported to South Korea while shipments to Ethiopia and Bangladesh have been to the tune of 6.8 lakh tonne and 6.6 lakh tonne, respectively. Smaller quantities of wheat have been exported to countriers such as Sudan, Oman, Qatar, Vietnam, Malaysia and the Philippines.

The Commission for Agricultural Costs and Prices (CACOP) had recommended export of 10 mt of wheat from FCI godowns during the 2013-14 fiscal.

Meanwhile, the FCI is finding it difficult to find buyers for wheat exports during the last few weeks as the base price fixed by the corporation has been higher than global prices, which have moderated from their peak of $ 320 per tonne to $ 280 per tonne at present.

FCI had fixed the base price at R1,484 a quintal (around $ 270 a tonne) for wheat exports. Traders said that at the current base rate, the export price of wheat from India would work out to be around $315 a tonne after including freight on board.

Despite lower demand for wheat in the global market recently, we have carved out a market for Indian wheat in many countries, an FCI official told FE.

Even trade sources say that India must continue with wheat exports regularly so that the country emerges as a key supplier of wheat.

Recently, the Cabinet had decided to allow export of 5 mt of wheat from FCI's 2011-12 stock through private traders. The government had given its nod to wheat export from FCI stocks to create storage space for the crop.

As the government has already lifted close to 25 mt wheat from farmers in the current season and it had around 22 mt in stocks from the previous year, the country has enough to continue with exports and meet its strategic reserve requirements.