Centre does a U-turn on wheat exports

The Centre has put on hold the decision to allow wheat exports, citing unfavourable global market conditions. The move comes barely 48 hours after Union Agriculture Minister Sharad Pawar announced that the four-year ban on wheat exports had been lifted.

However, export of rice and wheat products (maida and atta) will resume soon and the commerce ministry was working on last-minute modalities for facilitating the move.

Ministry officials said the decision on wheat exports comes in the backdrop of Russian black sea wheat flooding the global markets. While Russia is selling its wheat for $244 per tonne, Indian wheat would have been priced at $300 per tonne.

“Even if wheat export was allowed, shipments would further get delayed while wheat stock from Russia has already reached the global markets,” said an official..

“Annual wheat production has exceeded 80 million tonnes for three years now and market prices have been more or less stable. However, price wise, Indian wheat may be out of parity, as world wheat prices are at least 10 per cent lower than the domestic price in India.”

The official reasoned that setting a minimum export price at this point in time will neither help the traders. “The decision therefore has been kept on hold for a while,” he said.

Last week, the empowered group of ministers on food (EGoM) headed by Finance Minister Pranab Mukherjee had given an in-principal approval to lift the ban on wheat exports. It had also said that one million tonnes of common rice exports will be allowed, while wheat product exports may have an overall limit of 6.5 lakh tonnes.

The ban on shipments of wheat products was relaxed twice this year to allow preferential exports to Maldives and Afghanistan.

In early July, the government had foodgrain stocks of around 65 million tonnes (rice and wheat), much above the 35 million tonnes of buffer stock. Wheat production currently stands at 37.8 million tonnes and is expected at a record 84.27 million tonnes in 2011, after an all-time high output of 80.80 million tonnes last year.

India had banned shipments of wheat in early 2007 and non-basmati rice in April 2008 to bolster domestic supplies. The central foodgrain stock at Food Corporation of India (FCI) godowns was 65.6 mt in June — a three-fold rise in the quantity collected five years ago.

Rice exports will carry a minimum export price of $400 per tonne for the non-basmati variety and a MEP of $850 per tonne for other varieties. The final notification may put a cap of 12,500 tonnes for each exporter within the overall limit of one million tonnes.