Finmin report calls for lifting curb on wheat exports

The Finance Ministry has pitched for lifting curbs on wheat exports so that India could take advantage of the crop's scarcity in the global market due to production loss in countries like Russia and Pakistan.

India could make use of the global scarcity to earn through competitive prices for its wheat in the international market, the Department of Economic Affairs (DEA) has said.

"If India could look at easing wheat export curbs currently in place, subject to the 2010-11 wheat production prospects, it may be in a position to benefit from global wheat situation with competitive prices," said the Monthly Economic Review.

India is the world's second largest wheat producer and it contributes to around 12 per cent of the global production.

The country had a wheat stock of 29.8 million tonne as on September 1, much higher than the required norm.

Indian farmers harvested a record 80.71 million tonnes of wheat in the 2009-10 crop year (July-June), according to government data.

The DEA report said the country's wheat production prospects are buoyant due to a good monsoon and the centre already has a buffer stock beyond the minimum threshold.

"The discomfiting fact is that food inflation still continues to be cause of concern. The weekly inflation in wheat for the week ending August 28 remained at 7.04 per cent compared to 3.41 per cent a year ago," the review said.

India's food inflation crossed the 15 per cent mark for the week ended September 4, with the onset on a new index, calculated on the 2004-05 price base. Wheat inflation also continues to rise and registered 10.16 per cent.

The government had banned wheat exports in October 2007, and non-basmati rice from April 2008, to ensure supplies in the domestic market and check the price rise. However, the ban has been relaxed from time-to-time on diplomatic grounds.
    
In May, four lakh tonnes of wheat were allowed to be shipped to Bangladesh, followed by an additional one lakh tonne in August.
    
Foodgrain stocks have increased after four successive good harvests of wheat but the government, struggling to tame inflation, has not allowed wheat and rice exports.
    
Major wheat producers like Russia, Ukraine and Kazakhstan have suffered production loss of up to 25 per cent this year due to heat wave and forest fires.
    
In Pakistan, Canada and South-East Europe, heavy rainfalls and floods have played havoc with the crop.

"The world wheat stocks at the end of 2010-11 are forecast at 181 million tonnes, which is 18 million tonnes lower compared to 2009-10 estimates," the Finmin report said.
    
The review cited reports to highlight that international wheat prices rose to 18-month highs in August, before falling.
    
"The expected fall in the exports from the Black Sea region could see a shift in the trade flows in favour of exporting nations, especially US," it said.