Govt to ask Trading Corp to float fresh wheat import tenders

The government said it will ask State Trading Corporation (STC) to float fresh tenders for importing wheat, depending on the country's requirement and international price trends.

In a statement government said wheat imports are necessary to ensure food security and sustain various state-run welfare schemes.

Agriculture Minister Sharad Pawar had earlier said the country will import 5 million tonne wheat this year to build reserves.

The government said it has no plans to buy domestic wheat through tenders as it could lead to an increase in local prices and create a shortage in the open market, which caters to two-third of the country's population.

In May, the million tonne had recommended buying 306,000 tonne wheat at $263 a tonne in its 1- million-tonne import tender. The government had then decided against imports as global wheat rates were expected to ease after the Australian crop was harvested later in the year.

"On May 29, when the decision was taken to reject the tender, the CBOT futures were in the range of $170-180 with no indications towards any spurt in the near future," the statement said.

Moreover, at that time the import cost worked out to Rs 1,103 per 100 kg, way higher than the procurement price of Rs 850 per 100 kg.

The government was warned that imports at such a differential could lead to hoarding by farmers and traders in the hope of a rise in prices, and impede procurement.

In July, however, it decided to import 511,000 tonne wheat at a weighted average of $325 a tonne.

Defending its decision to import wheat at higher prices now, government said global wheat prices have risen considerably after the US Department of Agriculture lowered its global output estimate, and CBOT trends point to a further price rise in the coming months.

Despite putting in its "best effort", government was able to procure only 11.1 million tonne wheat from farmers as against a 15.1 million tonne target, making imports necessary to ensure food security was not compromised, the statement said.

The main Opposition at the Centre, the Bharatiya Janata Party had Thursday flayed the government's decision on costly wheat imports, after having cancelled an earlier tender in May when imports could have been cheaper.