The Hindu Business Line : Tamil Nadu flour mills offered Australian wheat at $220

Milling woes
Landed cost of Australian wheat will be Rs 12,000 a tonne.
Millers also say imports should be allowed till March 31 next.
Australian wheat favoured as offers from other origins are red ones.

Chennai , Aug. 7

After much persuasion Australia's AWB Ltd has come forward to sell wheat to millers in South India, especially Tamil Nadu, at $220 a tonne c&f. However, the flour mills are not in a position to buy at that price as they feel it is unviable given the fact that they will have to pay a 5.2 per cent Customs duty.

"For mills, particularly in Tamil Nadu, it will not be possible to buy wheat at this price due to the Customs duty. At this price, the landed cost of imported wheat will be nearly Rs 12,000 a tonne. Given the thin margin in this business, we will not be able to go for it," said Mr R.K. Mohan, President, Tamil Nadu Roller Flour Mills Association.

Imports increase

Mills in the South prefer Australian wheat to either Canadian or Ukraine wheat. "We favour Australian wheat because of its colour and quality. Canadian and US wheat are red in colour and we perceive problems in convincing the customers, who could be reluctant to buy. Ukraine wheat, on the other hand, is seen inferior to Indian wheat," said a south-based miller.

The Centre in June allowed the private trade to import wheat at 5 per cent Customs duty, after cutting it from the previous 50 per cent to meet domestic demand. Imports also attract a 0.2 per cent levy towards educational cess.

Since then, the private trade has contracted about one-lakh tonnes of Canadian and Ukrain wheat. Imports by private trade are besides the State Trading Corporation (STC) floating tenders to import 35 lakh tonnes of wheat. On the other hand, public sector MMTC is buying 50,000 tonnes from its Singapore subsidiary.

Supply hit

The Centre decided to import wheat after seven years on decline in domestic production and buffer stocks. Wheat production during 2005-06 (July-June) has been estimated at 69.48 million tonnes (mt) from earlier estimates of 73.06 mt and 75.5 mt.

"Supplies have dwindled and there is a need to import wheat. We have urged the Food and Finance Ministries to permit shipments into the country at zero Customs duty," said Mr Mohan. "We have also asked the Centre to extend the permission to import wheat until March 31 next."

Last week, the Centre gave time till February 27 for STC to get the five-lakh tonnes wheat it contracted to buy from AWB. "Allowing us to import till March 31 will not hurt the growers as the next crop arrivals are due only in mid-April. Why we have urged the Centre to extend the time is because it delayed in giving us permission to import," Mr Mohan said. "Also, the Forward Markets Commission should insist on delivery of futures contract, particularly the long-term ones. We are insisting this as we find that there is more speculation."

Meanwhile, wheat prices, which tended to decline towards last weekend, increased to Rs 891 a quintal in New Delhi on Monday. In Hapur, it increased to Rs 870. On NCDEX, wheat for August delivery was quoted lower than spot at Rs 867.60, while December contracts ruled at Rs 963.40.

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