Good Crop May Cut Wheat Import

India is likely to import less wheat in 1997/98 than expected after sizeable state purchases from farmers following a good harvest, state officials and analysts said on Friday.

Food minister Raghuvansh Prasad Singh said on Thursday that India might cut imports because state agencies' purchases from farmers had reached almost nine million tonnes, and were expected to rise further.

Government officials say the agencies are expected to buy about 11.1 million tonnes of wheat from farmers in 1997/98 compared with 8.2 million the previous year. The government buys wheat from farmers to build up buffer stocks, to be used to control prices by releasing grain through its distribution system.

 

In December 1996, India decided to import two million tonnes of wheat to augment supplies and curb rising domestic prices. State Trading Corp (STC) contracted for about 1.75 million tonnes, and almost the entire consignment has arrived.

It was decided to import another two million tonnes in 1997/98 but analysts say it will not need these imports because they expect a bumper crop. "I am sure we will not need so much this year," said a Bombay-based commodities analyst. "

Procurement by agencies is expected to be about three million tonnes more than last year. Plus, the crop is expected to be more this year," he added.

The government expects wheat output of 64.66 million tonnes in 1996/97 (July-June) crop year, up from 62.62 million the previous year.

Of 1997/98 authorised imports, STC has contracted to buy about one million tonnes of wheat from Australia which is due for arrival in August-September.

"The import pressure has already eased the price situation on the domestic front," the analyst said.

"It is very likely that the government may not go for the whole quantity. It may even cancel some of the contracted amount."

Traders said domestic wheat prices had eased to between Rs 4,900- 5,200 per tonne from Rs 8,000 per tonne in December 1996.

Analysts said the government had decided to import the extra two million tonnes of wheat in 1997/98 fearing that its purchases might fall after farmers in the northern states threatened not to sell to the government unless prices were raised

."However, procurement went smoothly after the government decided to pay bonuses to farmers," one analyst said. "Hence, logically there is no reason for further imports."

After protests from farmers, the government decided in April to pay a bonus of Rs 600 per tonne in addition to the minimum price of Rs 4,150 per tonne.