Financial Daily from THE HINDU group of publications
Friday, Apr 12, 2002
Financial Daily from THE HINDU group of publications Friday, Apr 12, 2002 |
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Agri-Biz & Commodities
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Foodgrains Government - Agricultural Policy Revised grains export price from May 11 Ch. Prashanth Reddy
HYDERABAD, April 11 THE revised issue prices for export of wheat and rice will be made effective from May 11 instead of April 1. A decision to this effect has been taken by the Union Government following a representation made by rice and wheat exporters. The Government issued an order on March 26 enhancing the export price of white rice by Rs 110 per tonne, parboiled rice by Rs 115 and wheat by Rs 60 per tonne for the current quarter (April to June). The exporters, however, represented to the Government to give them 45 days time before the prices were hiked. Accordingly, the Ministry of Consumer Affairs, Food and Public Distribution partially modified the order stating that the new prices would be effective from May 11. Interestingly, industry sources said, that from October 2001 to March, this year, exporters had lifted 17 lakh tonnes of rice from the Food Corporation of India (FCI) at heavily subsidised prices. But only 12 lakh tonnes of rice has been shipped out of India. What happened to the remaining 5 lakh tonnes? According to sources, at least a part of this quantity could have been sold by some of the traders in the domestic market. Domestic sales are profitable to exporters because they can pick up rice from FCI at a subsidised price of Rs 5,760 per tonne and sell the same in the local market at around Rs 9,000 per tonne as the Government open market price is Rs 9,500 per tonne. This kind of diversion, sources said, was possible as the traders can sign contracts of 5 per cent broken, which allows them to explain away up to 20 per cent of their FCI stocks as brokens sold in the local market. But they actually export rice with 25 per cent brokens. For instance, if a trader wants to export 10,000 tonnes of white rice with 5 per cent broken, the Government allows him to lift an additional 20 per cent quantity as FCI gives rice which is 25 per cent broken. In turn, the trader might actually export 25 per cent broken rice though it is stated in the document that it is only 5 per cent broken. The remaining 20 per cent, though not permissible, can be sold in the local market. Industry sources said this kind of business resorted to by some traders was affecting the operations of genuine exporters as LT Overseas, Foods, Fats and Fertilisers, Pepsi and ITC International Business Division.
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