Wheat exports to fetch $600 million this year

FCI to export two million tonnes at a realisation of $300 a tonne

With a 150 per cent excess foodgrain stock, Food Corporation of India (FCI) has decided to export two million tonnes of wheat this financial year. Doing so would get it $600 million (Rs 3,800 crore).

The food ministry and the Cabinet Committee on Economic Affairs (CCEA) have approved the move. FCI, the government’s foodgrain procurement and distribution agency, similarly sold 4.2 mt of wheat in two lots during 2012-13. The coming export would create space for the new crop, set to hit the market in a couple of weeks. And, there’d be an inflow of foreign currency, needed to protect the rupee from further depreciation.

“We will float global tenders soon to initiate the process,” said an FCI official. A committee headed by FCI Chairman and Managing Director C Viswanath will meet soon to finalise the formalities.

CCEA had approved 4.5 mt of wheat export in FY13; actual export was 4.2 mt, fetching $1.4 billion (Rs 7,000 crore). The wheat, sold as ‘India’ brand, got a premium of nearly $40 a tonne over the $267 a tonne on the benchmark Chicago Board of Trade. The current price is $233 a tonne; FCI might get about $300 a tonne. Realisation could be higher in rupee terms, due to the big fall in the rupee against the dollar. Last year, it was 54 to a dollar; it is 20 per cent lower now. This would make up for the lower global price of wheat.

“The acceptability of Indian wheat is an encouraging sign, as evident from the sale last year. Therefore, another two mt will be offered to  foreign buyers. We have the stocks. It is also the right time to enter the international market,” said a senior FCI officer. The agency has 38.36 mt of wheat in its warehouses, against the requirement of 14 mt.

After the tenders are floated, an empowered committee, headed by the commerce secretary, will approve the successful bidders. The foreign buyers of Indian wheat in the international market are mainly from South Korea, Bangladesh and Ethiopia. FCI will undertake the export through State Trading Corporation, PEC and MMTC.