India plans duty-free import of wheat

New Delhi, Feb 2 | Updated: Feb 3 2006, 05:30am hrs
India, the worlds third biggest wheat producer, plans to import 5,00,000 metric tons of cereal this year to reduce prices in the southern states. The wheat will be imported duty-free through the ports of Chennai, Tuticorin, Kakinada and Visakhapatnam, all in southern India, Sharad Pawar, Union minister for food, consumer affairs and agriculture said. The cargo will take two months to reach.

Addressing a press conference here on Thursday, Mr Pawar said that this is necessary to increase the stock in the central pool and contain the rising market price of this commodity. He said that the State Trading Corporation has been authorised to import this quantity on government account.

The minister added that he would again review the situation in May this year before taking further measures. Currently, global price of wheat is in the range of $120 to $180 a tonne. The situation may change, when India enters as importer.

The last wheat import done by India was between 1996-99, when it imported 4,20,000 tonne of wheat. Imports were then largely from Canada, Australia and Argentina. The wholesale price of wheat Dara in Hapur market, in north India, is Rs 930 to Rs 940 a quintal. In Hyderabad, the price of wheat Bansi is Rs 1,000 to Rs 1,050 a quintal and that of wheat Sharbati is Rs 1,025 to Rs 1,350 a quintal. In Kochi, the price of wheat is Rs 1,250 to Rs 1,350 a quintal. As the prices of wheat shot up in the last month all over the country, the government made an additional allocation of 63,000 tonne to 17 states for distribution under public distribution system (PDS) over and above the initial allocation for the month at 1,47,000 tonne.

But these states lifted only 1,09,615 tonne. It is noted that in some states like UP and MP, despite allocation, no lifting has taken place, the prices have shown a downward trend. This is merely on Union governments announcement to intervene in the market. Market prices in Gujarat, West Bengal and Bihar has shown a downward trend though lifting of stocks by these are marginal.

The Food Corporation of India released 1,89,000 tonne of wheat in December 2005, for open market sales followed by an additional quantity of 1,50,000 tonne in the first week of January. Another 1,50,000 tonne is slated to be released for open market sales in February.

When asked as to whether the traders are consciously pushing up prices by holding stocks, Mr Pawar simply said, These days there are are no limit to stockholdings by traders.

At present, wheat stock in the central pool is 4,70,000 tonne. The total offtake of wheat from the central pool for PDS and other schemes is around 1,23,000 tonne per month. The government is expecting a good wheat crop at the end of the harvest in April as the area under wheat crop has increased. Mr Pawar said that he expects a 3% growth in the farm sector in 2005-06.