Govt may suspend wheat export

Crop damage due to recent hailstorms the reason; India may miss out on global price surge

The recent unseasonal hailstorms have reduced India’s chance to get an advantage from rising global wheat prices, since the government is looking at suspending exports, for fear of crop losses.

 The ongoing stand-off between Russia and Ukraine over Crimea has reduced wheat transportation from the world’s two largest European suppliers to the world. So, prices have risen eight per cent or $20 a tonne in a month, to $274 a tonne in the London markets. Ukraine exports around half its annual output; in 2013, this was 21.5 million tonnes.

Last year, too, when global wheat prices rose to over $300 a tonne, India could not benefit through export although it had excess grain. This was due to abnormal delay in policy decisions. At present, as mentioned, the government plans to suspend wheat export, even before achieving the target of two mt.

“The decision is underway. The ministry of food has already taken a decision; it will communicate soon to the Food Corporation of India (FCI, the government’s procurement and storage agency),” said an informed source.

By the time the goof ministry opened export in August 2013 and set up a shipment target of two mt until June 2014, wheat prices crashed to $260 a tonne. Consequently, wheat export tenders floated by state trading agencies PEC and MMTC (for wheat from FCI) got a poor response. As against the average realisation of $300 a tonne for its over four mt of wheat export in 2012-13, FCI got a tepid response even at $260 a tonne.

India has already accepted bids for 1.4 mt of wheat export so far this year, of the two mt target. The aim at the time it was set was to earn Rs 3,400 crore from export at an average of $300 a tonne.

Sources said assessment of the crop damage was yet to be done. Hence, the government had decided to suspend export temporarily. In case of insignificant damage, these can be be opened again, to meet the target.

Wheat is a fully rabi crop, sown between October and December for harvesting between March and May. Before the hailstorms, the Karnal (Haryana)–based Wheat Research Institute forecast the country’s output at 95.6 mt this year, compared to 92.46 mt in the previous year.

 “Private sector players have already signed contracts for execution in coming months. These will continue,” said D P Singh, president of the All India Grain Exporters Association. Meanwhile, PEC and MMTC had floated three export tenders for a cumulative 105,000 tonnes, to be shipped next month.