India to stick with wheat export ban

India, the world’s second-largest wheat grower, has put off a decision to lift the ban on foodgrain export until June, despite bulging stocks and shrinking storage space.

India, the world’s second-largest wheat grower, has put off a decision to lift the ban on foodgrain export until June, despite bulging stocks and shrinking storage space.

HT Image

“It would be ridiculous to export wheat when international prices are lower than domestic prices,” a farm ministry official said.

Considering global wheat prices — about Rs 8,500 a tonne — are much lower than India’s, which is Rs 11,800 a tonne, the government will have to dole out an export subsidy or pay the difference to enable exports.

“The government does not want to incur such additional costs when stocks are manageable,” the senior official said.

The country expects to harvest a record wheat crop in 2010, slightly more than last year’s all-time high of 80.6 million tonnes, amid concerns over storage space constraints.

The country’s grain holdings are more than double from a year ago. Its wheat reserves are about 18.4 million tonnes, against the current buffer requirement of 4 million tonnes, while rice stocks stand at 26.9 million tonnes, against a buffer target of 12 million tonnes.

India’s silos are grossly inadequate for its swelling foodgrain reserves with the total shortfall in warehouses estimated at 8 million tonnes, according to a note prepared by the standing committee on food and consumer affairs.

The government hopes to make space for oncoming stocks by hiring private godowns and streamlining reserves.

The Food Corporation of India, the agency that manages foodstocks, has held a series of meetings to discuss stocks and storage position.

Wheat in India is a winter crop sown in October and reaped in March.

Agriculture minister Sharad Pawar had last month said a panel of ministers would consider lifting ban on wheat exports but ruled out any immediate decision.