Iran lowers rust alarm, to buy 200,000 tonnes wheat

Long-term deal prospects struck over pricing concerns, fear of carcinogens in Indian wheat

The long-standing row between India and Iran over the presence of rust in Indian wheat seems to have settled down for the time. Iran has agreed to purchase wheat from India with 0.25 per cent tolerance to ‘Karnal Bunt’ rust as an interim measure.

However, India’s proposal to enter into a long-term deal with Iran to export around 1-2 million tonnes of wheat per annum for at least three years is pending because Iran is insisting on a flat rate for import, while India wants the price to be linked to an international index based futures.

WHAT'S THE BIG DEAL

Iran agrees to buy 2,00,000 tonnes wheat from India at $325 a tonne as an interim measure

‘Karnal Bunt’ rust with 0.25% tolerance level agreed between India and Iran

Govt eyes three-year deal for export of 1-2 mn tonnes to Iran on yearly basis

The Iranians also have some issues over presence of certain alfatoxin (a potential carcinogen) elements in Indian wheat, which officials said the Indian side is trying to address.

“The Food Corporation of India at present does not conduct any tests for presence of certain alfatoxin substance in wheat. But, now that the Iranian side has raised the issue, we would discuss it with the Plant Protection Organisation (PPO) of Iran and also labs in India,” a senior food ministry official said.

Officials said earlier, Iran was adamant on allowing just transit facility to Indian wheat for sale in Pakistan and Afghanistan, but not for self consumption because of presence of ‘Karnal Bunt’ rust.

It wanted a joint study by plant protection organisations from both India and Iran, which was flatly refused by New Delhi, leading to a stalemate in negotiations between the two countries.

India even considered sourcing wheat from areas where ‘Karnal Bunt’ was not present to addresses Iran’s concerns.

However, after much persuasion Iran relented and as an interim measure has agreed to import around 2,00,000 tonnes of wheat by December at $325 per tonnes before entering into the long-term deal.

Officials said the export to Iran would be without any performance bank guarantee from State Trading Corporation (STC) and Power Equipment Corporation (PEC), the two trading arms of the central government.

“The Iranian side wanted performance bank guarantee from STC and PEC, which was not agreeable to us (Indian side) but they still want a  one-page letter of guarantee signed by these two organisations, to which we have replied that India would get back after STC and PEC consult their legal sides,” the official said.

India has been exporting wheat to Iran for last several years. However, of late, the exports got struck after Iran raised concerns over presence of ‘Karnal Bunt’ rust in Indian wheat. The rust deteriorates the quality of wheat.

But, with production of a record over 94 million tonnes of wheat in 2011-12, India has been exploring various options to liquidate some of the stocks from the central pool to ease its enormous storage crunch.

It has opened exports for private traders last year and also decided to export around 2 million tonnes of wheat for the first time in more than seven years from central pool.

Of this, Food Corporation of India (FCI) officials said that around 3,00,000 tonnes has already been shipped and 6,40,000 tonnes approved for exports.

The government has also sold around 3.0 million tonnes of wheat from central pool in the open market for bulk consumers and others to liquidate its stocks.

As on October 1, 2012, India has around 43.1 million tonnes of wheat in its central stocks as against a requirement of 21.2 million tonnes.