High domestic prices force millers to import wheat

A sudden spurt in wheat prices has prompted flour millers in southern states to go for imported Australian wheat through trading agencies. Since May, these flour millers are estimated to have placed orders for around 12,000 tonnes imported wheat.

Over the past three weeks, wheat prices in Delhi have jumped by over 8 per cent or Rs 100 to Rs 1,260 a quintal. This, even as the procurement season has not ended.

“We were getting Uttar Pradesh wheat delivered at Bangalore at a price of Rs 1,250 a quintal about a month ago. This has now increased to Rs 1,400. Similarly, wheat from Madhya Pradesh was available at Rs 1,450. But this has increased to Rs 1, 600,” said M K Dattaraj of Bangalore-based Krishna Flour Mills. Dattaraj has bought some Australian wheat through a trading agency.

He said the Australian premium wheat (that is suitable for bakery products) is available at Chennai port for Rs 1,550 a quintal. While similar quality MP wheat is available at a price of around Rs 1,600 a quintal. “In 2009-10, the country is estimated to have imported close to 200,000 tonnes of wheat. In the current year, import has just started to pick up and it will continue,” he said.

“This price movement is not justified. We had two consecutive years of record wheat production and the government has procured large quantities. We have adequate stocks. The industry did not procure much because it was expecting the government to release stocks in open market sale in the view of storage capacity shortage,” said Veena Sharma, general secretary, Roller Flour Millers Federation.

In 2008-09, the country produced 80.58 million tonnes of wheat, which rose marginally to 80.98 million tonnes in 2009-10. Last year, the government agencies procured a record 25.40 million tonnes of wheat. Procurement, so far, in the current year has been 22.41 million tonnes. As of May 1, the government pool had wheat stock of 33.71 million tonnes, sufficient to meet two years of requirement for public distribution system. However, the government is not keen to offload any quantity in open market for bulk consumers like flour millers.

Flour millers of southern states rely on northern states like Uttar Pradesh and Rajasthan and central states like Madhya Pradesh. However, prices in all these states have increased since mid-May. Wheat prices have risen about 10 per cent at Hardoi, a trading centre in UP. The state has seen significant interest from private buyers as well.