Govt may lift ban on export of wheat

The ban on wheat exports, imposed since 2007, may be lifted this time to tap the huge global market that is facing supply shortage due to drought in Russia.

The food ministry is assessing the potential of opening of wheat exports, but it said a final call would only be taken after a clear picture on this year’s harvest came.

The inter-ministerial group (IMG) on food inflation, constituted by Prime Minister Manmohan Singh, under the chairmanship of Chief Economic Adviser in the Finance Ministry Kaushik Basu, has sought information from various government ministries on the efficacy of allowing export of wheat. The IMG was constituted in the wake of rising prices in December.

“We are in the process of collecting all relevant information about stocks and availability before referring the matter to the IMG, which will then, recommend to the committee of secretaries whether or not exports could be allowed,” a senior food ministry official said. He said harvesting of the current crop that would start in full swing by this month would also have a big bearing on any export decision.

Earlier, Food Minister K V Thomas along with his counterpart in agriculture Sharad Pawar had favoured lifting the ban on wheat exports on the back of record production.

The commerce ministry too has been in favour of allowing wheat exports after the current harvest season to take advantage of high ruling prices. India had banned wheat exports in 2007 as government procurement dropped because of low harvest.

In fact, the fall in local procurement prompted the government to import almost 7.3 million tonnes of wheat in 2006 and 2007.

Trade sources said around 1-3 million tonnes of wheat could be easily exported from India and it won’t have any bearing on government’s food stocks and grain availability.

“This is the best time to allow wheat exports as Indian wheat, which is comparable to Australian wheat, will fetch around Rs 15-Rs 16 per kilogram in the international markets, while the domestic price is around Rs 12 per kg,” an official from an international trading house said.

He said global grain which was facing a shortage of wheat because of drought in Russia would be keen to lap up any export from India.

The agriculture ministry has estimated India’s wheat production in 2010-2011 crop marketing year to reach a record high of 81.47 million tonnes. Last year, the country produced around 80.80 million tonnes of wheat.

Before exports of wheat were banned in 2007, the country had exported 47,000 tonnes of wheat in 2006-07 and around 2 million tonnes in 2004-05, commerce ministry data showed.

Wheat stocks as on March 1 were estimated to be around 17.2 million tonnes, which is more than double the 8.2 million tonnes wheat required to be stocked during that time of the year. Rice stocks during the same period was estimated at 28.75 million tonnes against a target of 11.8 million tonnes, government figures showed.

Food inflation fell to a single digit at 9.52% during the week-ended February 26, after a gap of three months. It had climbed to a year's high of 18.32% in late December.

Meanwhile, officials said though exporting wheat was a viable option, government would have to take care of its food security needs before it could give a nod to exports.