Despite huge stock, India misses wheat export bus

As of March 1, wheat stock stood at 27.1 mt, against the required 7 mt

India seems to have missed an opportunity to stamp its authority on the world wheat market and emerge as a big exporter in 2012-13, just like it did in rice last year. The government’s inability to liquidate wheat from its own inventories in time will limit exports in 2012-13 to around 5 million tonnes as against a potential of almost 10 million tonnes. The year 2012-13 provided an opportunity to India to place itself among the world's five largest wheat exports against among ten currently, as the leading producers like US are all set to export less amount.

Though the exports have cost the exchequer an extra subsidy of around Rs 1,700 crore because the outbound shipments were at rates lower than the cost of procurement, storage and transportation of wheat incurred by Food Corporation of India (FCI), experts believe that it is better than bearing a higher subsidy in just carrying the grains from one season to another.

“The choice is very simple either you bear a subsidy of $15-20 (Rs 800-1,080) per tonne on exporting wheat or you bear a subsidy of almost $50 (2,700) per tonne in carrying the wheat into the next season and thereafter in every season as granaries don’t have space,” eminent agriculture economist and chairman of Commission for Agriculture Costs and Prices (CACP) Ashok Gulati said.

Gulati, who had strongly advocated that government should liquidate almost 10-15 million tonnes of wheat by end of March, now feels that India missed a great opportunity to export sizeable quantities of wheat because of slow action.

“This would have helped the government earn valuable $3 billion in foreign exchange and bring down its now infamous Current Account Deficit (CAD),” he said.

Another expert said the best time to export could have been around August-September as domestic procurement was over and international market was benign. "However, as against a requirement of 10-15 million tonnes, only about 4.5 million tonnes were cleared. Subsequently, another 5.5 million tonnes were cleared, but the international market had firmed up by then,” another expert said.

He said 2012-13 provided a unique opportunity to India as US, the world’s biggest wheat exporter was selling less, so also were some of the other major players like Russia.

“In 2013-14, the same will not prevail as US production is showing signs of improvement and getting an average price of $300 per tonne will be difficult, “ Gulati opined.

In 2012-13 , as per an assessment by United States Department of Agriculture, US is expected to export around 28 million tonnes of wheat,  Australia around 16.50 million tonnes,  Canada around 18.50 million tonnes  and Russia around 10.50 million tonnes. India, could have been almost at par with Russia and among the world’s five largest exporters.

According to the Food and Agriculture Organisation (FAO), in 2012 calendar year, India emerged as the world’s biggest exporter of rice piping traditional leader Thailand by exporting almost 9 million tonnes of rice.

As of March 1, 2013, India has wheat stocks of around 27.1 million tonnes, as against a requirement of mere 7 million tonnes, while total foodgrains stocks in the central pool (which also includes rice) is estimated to be almost 63 million tonnes, as against a requirement of 21.2 million tonnes.

Experts believe that foodgrains stocks could rise to mind boggling 95-100 million tonnes by June 1 as government is again expected to procure a record 42 million tonnes of wheat from April 1, 2013.