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Harish Damodaran

New Delhi , Nov. 13

FOODGRAIN exporters are a harried lot today, with roughly Rs 1,200 crore of their payments stuck with the Food Corporation of India (FCI) against undelivered wheat and rice from the latter's godowns.

"Despite having valid release orders for exports, against which we have already made payments, neither has the FCI issued grain from its godowns nor has the Railways made available the rakes to transport the same. The current backlog is 873 rakes (each of 2,350 tonnes), corresponding to over two million tonnes of rice and wheat. Since these have been bought from FCI at an average of Rs 6,000 per tonne, it translates into Rs 1,200 crore of stranded working capital," said Mr Amit Takkar, General Manager (Trading), Madhya Pradesh Glychem Industries Ltd, a Ruchi Group company.

The existing procedure for export of foodgrains from the Central pool involves broadly three stages. In the first stage, the FCI issues an allocation order to the exporter concerned for delivering a certain quantity of grain (say 5,000 tonnes) against a valid order. The exporter then makes the payment to FCI, which gives him the release order for lifting the grain. The exporter presents this order for placing an indent with the Railways and the release of the grain, too, is made at this stage when the rake is placed at the station of loading.

The exporters have basically been stuck at the third stage, with FCI attributing the problem largely to the non-availability of rakes from Railways. This, in turn, has been because of the priority being given to allocate rakes for movement of grain to drought-hit States. While the drought situation has eased considerably over the last couple of months, which means that the Railways is now able to spare about 10 rakes per day (against 5-6 earlier) to exporters, FCI is, however, now confronting a new problem: a massive depletion of its stocks.

As on October 1, 2003, rice stocks in the Central pool, at 52.41 lakh tonnes (lt), stood not only below the minimum buffer norm of 65 lt for this date, but also corresponded to the lowest level since the 51 lt of October 1, 1992. The situation is somewhat better in wheat, with actual inventories of 184.27 lt being higher than the normative level of 116 lt for October 1. The total stock of foodgrains in the Central pool, at 236.79 lt as on October 1, 2003 and is the lowest since the 153.42 lt of October 1, 1997; a far cry from the peak of 648.30 lt attained on June 1, 2002.

Much of this depletion has been due to exports. According to the Food Ministry, during the period from November 2000 to September 2003, a total quantity of 225.22 lt (134.74 lt wheat and 90.48 lt rice) has been shipped out of the country, with 301.42 lt (168.69 lt wheat and 132.73 lt rice) being lifted by exporters from FCI godowns. The total quantities against which exporters have made payments amounted to 342.22 lt (202.14 lt wheat and 140.08 lt rice). Besides exports, FCI has also disposed of about 200 lt of grains since 2001-02 under various welfare schemes.

As a result of , FCI has, since August 10, stopped issuing fresh allocation or release orders for exports, apart from not delivering grain against pending orders. Simultaneously, it has steeply hiked the issue prices at which the grains are delivered to exporters. While officials defend these moves, citing that "we are no longer in a situation where we have to necessarily export at any price", exporters feel such a policy is short-sighted.

"Today, India has become the world's second largest exporter of rice and the seventh largest in wheat. We cannot maintain this if we develop the reputation of being an unreliable supplier. Building markets is not an easy task and an on-off policy with respect to exports would only alienate us from our buyers", Mr D.P. Singh, Managing Director, Sara International Ltd and Chairman, All India Grain Exporters Association pointed out.

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