Govt takes stock, stops export of excess wheat as global prices dip

Written by Sandip Das | New Delhi | Updated: May 30 2014, 11:19am hrs
The Centre has decided to discontinue the export of surplus wheat from Food Corporation of India's (FCI) stocks with immediate effect. Sources told FE that a decline in global prices due to excessive supply and anger against India's 'subsidised exports' in the WTO forum forced the government to press the button on wheat shipments.

In 2013-14 (allowed till June), the FCI was aiming at exporting 2 million tonnes of wheat from its excess stocks, of which 1.55 million tonnes has already been shipped to countries such as South Korea, Bangladesh, Ethiopia and Sri Lanka.

The last consignment of wheat would be shipped in the next few days thus winding up wheat exports from the government stocks and the remaining quantity of grain has been returned to FCI godowns, a commerce ministry official said.

Sources also said that average price realisation from wheat exports in 2013-14 has been around $282 per tonne against a base price of $ 260 per tonne. In the previous year, India exported 4.2 million tonnes of wheat from FCI's stocks with a price realisation of $311 a tonne (more than Rs 7,000 crore).

Our exports realisation cannot match last year's level because of a sharp rise in global wheat output this year, an official said.

Besides official sources said that due to the new NDA government taking charge, it would be left to the current regime to decide on the quantum of wheat exports in the future.

Official agree that FCI's 42 million tonnes of stock is more than the buffer stocks norms. FCI can export a chunk of the grain besides selling it to private trade through the open market sale scheme.

In October last year, the government rejected bids received for exports of 1.5 lakh tonnes of wheat as it was far below the then base price of $ 300 per tonne. Subsequently the government reduced the base price for exports to $ 260 a tonne.

An agriculture ministry official said that due to a well-spread monsoon last year, there is bumper wheat crop of more than 95.85 million tonne for 2013-14.

Developed regions such as the European Union and the US have opposed this stockpiling, which is used by India to supply cheap grains under its Targeted Public Distribution System (TPDS).

However, India has consistently maintained that the issue of food security is non-negotiable.Need of public stock-holding of grains to ensure food security must be respected," a commerce ministry official said.

The inability to increase the buffer stock norms, last revised in 2005, has put the spotlight on India's excess public stockholding of grains, which may impact global prices because a part of this is being exported.

Under the food ministry's proposal being considered by officials of agriculture, finance ministries and the Planning Commission, the buffer stock norm should be revised from 31.9 million tonnes (mt) to 53.5 million tonnes for July when the stocks are at the highest level.