Export curb likely on rice, wheat, sugar & cotton

Govt uneasy at prices, availability for domestic consumption

The government might soon review its export policy for rice, wheat, sugar and cotton. Shipments abroad of these commodities might be curbed till the full harvest arrives and the festival season ends.

Their export is currently allowed under Open General Licence, meaning no permission is required. According to officials, the departments of food and consumer affairs have both objected strongly to the free commercial export of rice, wheat and sugar, with their high prices in the domestic market. Rice and wheat stocks available in storages were for maintaining buffer stock levels and for the Public Distribution System (PDS); these could not be diverted for retail consumption in the domestic market, they said.

The domestic price of rice has been going up. The first advance estimates of the Union agriculture ministry says rice output is being projected at 85.6 million tonnes (mt), compared to a record 91.5 mt last year. Official sources said the recommendation is to restrict free export of rice for the rest of this financial year, except for the top-end basmati rice, mainly produced for export. The price of rice across the country has gone up by two to 30 per cent year over the year, barring the eastern states, which are having a second crop.

Sugar is witnessing a rise in prices and officials feel even if the output of cane is high, productivity (conversion to sugar after crushing) will be lower due to lack of rain. Export of sugar had stopped since domestic prices began rising. The ministry has recommended banning export till at least December, when the festive demand is over and the second harvest will arrive in the market.

Across the country sugar prices have gone up by 25-58 per cent year on year and might go up further. Output this year is estimated to be the same as last year.

A ban on sugar export, say officials, wouldn’t hit millers, as the government proposes to raise the price of levy sugar for the PDS to Rs 22 a kg from the Rs 13.5 a kg fixed since 2002. This would help the industry recover around Rs 12 a kg from selling sugar under PDS.

A shortage in cotton output is expected due to erratic rain. The free export policy comes to an end in a month. The textile ministry had already recommended a ban on export till the market showed surplus availability for the domestic industry.

Cotton prices in Tamil Nadu and Uttar Pradesh have risen 25 per cent over a year. The first advance estimates, show cotton production at 32 million bales (of 170 kg each), compared to last year’s 35.2 million bales.