Indian traders may manage to ship out barely one-tenth of the wheat products export quota this fiscal year through March 2012, as buyers are shying away due to the lack of a long-term policy, trade and industry executives said. They also fear that the government?s decision on Thursday to lift a more-than-four-year-old ban on wheat exports will make grain supplies more expensive for them, adding to their worries.
Food Minister K V Thomas said on Thursday that the government has allowed unrestricted wheat export and will curb it only after the shipment exceeds 2 million tonne.
Although India?the world?s second-largest wheat producer?had kept a ban on the export of the staple grain since 2007, it allowed private traders to ship 6,50,000 tonne of wheat products for a limited period in 2009, and the programme was extended in phases until March 31, 2011, after the industry failed to exhaust the quota. On July 20, the government again allowed traders to export until the end of this fiscal around 5,00,000 tonne of wheat products that were left unsold out of the quota.
Trade executives now say only 50,000 tonne to 60,000 tonne of wheat products, including atta and maida, may be exported by the end of 2011-12 as traders are finding it difficult to firm up contracts due to uncertainties about government policies. A more-than-two-year-old ban until mid-2009 on wheat product exports resulted in clients shifting to other suppliers, they added.
?The problem is nobody would like to firm up contracts anticipating that the government will relax rules or extend deadline for exports. Your buyer wants firm commitment on supplies and delivery in time apart from competitive prices. While the traders are trying hard to offer products at competitive costs despite high wheat prices locally compared with some other countries, uncertainties about export policy are playing the spoilsport,? a flour miller from Karnataka said.
?The whole process of firming up contracts, securing wheat supplies and processing it, shipping the product and collecting payments takes around 7-8 months. There is no ready-made buyer available in the international market, and you will have to attract them with your offers. Why should a buyer trust you if you go on and off from the international market due to a lack of long-term policy,” said Veena Sharma, secretary of the Roller Flour Mills Federation of India.
Exporters are trying to not just create markets for their products but also rebuild their image as reliable suppliers, she added.
Flour millers are now demanding that the government formulate a long-term policy on wheat product exports, at least for five years, and may put a cap on shipments at 2,00,000 tonne a year if it wants. ?The cap on exports will allay fears of a domestic shortage even if exports are allowed. The policy clarity will also help us to firm up export contracts,? Sharma said.
Millers are also seeking government support as well as subsidy for wheat products exports, as the lifting of the ban on wheat shipments will drive up demand for the grain. Traders said the lifting of the ban will prevent a fall in domestic wheat prices, caused by a bumper harvest for a second successive year in 2010-11 (July-June). The country is in a position to ship high-protein varieties at competitive prices, they added.
Denmark, the Middle East, Indonesia, Sri Lanka, Nepal and the Maldives are some of the key buyers of Indian wheat products such as semolina and wheat flour that are used to make bread and bakery items.
Exporters usually target these markets as Indian wheat products cater for the taste bud of a significant Indian population in these countries.