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M.R. Subramani

Advantage Down Under? Lower freight charges, shorter delivery time help Australia enjoy an edge

Chennai , Feb. 24

The Union Government is likely to award the tender to import five lakh tonnes (lt) of wheat next week. Currently, a high-level committee set by the Centre is processing the bids for the tender.

"The high-level committee could come to a conclusion on the bids in a day or two and the tender award would be finalised next week," official sources told Business Line.

Earlier this month, the Centre said it would resort to imports of wheat duty-free after a gap of six years to rein in rising prices. The imports would be through the southern ports of Visakhapatnam, Mangalore, Tuticorin, Chennai and Cochin. The State Trading Corporation (STC) will import it on behalf of the Centre on commercial basis and the Food Ministry will have the ultimate say on how the shipments would be utilised.

A tender floated by STC on February 11 closed on Monday.

Bidders' offers

According to the sources, there were eight bidders for the tender with some coming forward to offer the entire five lt and some specified quantities.

Asked about the countries from where the bids had come, the sources said it had come from almost all countries that had stocks. "The bids were evaluated by STC and forwarded to the Food Ministry, where the high-level panel is examining it," the sources said. To a question on technical evaluation of the bidders, they said: "STC has played its part, it's now for the panel to decide."

Tough norms

There have been objections to the quality parameters set by the Centre for wheat imports. The US, in particular, has said two of the conditions would be hard to meet under the phyto-sanitary requirements.

But the Union and Food and Agriculture Minister, Mr Sharad Pawar, has dismissed these complaints, saying the tender norms were fixed after consultations with the Department of Plant Quarantine.

The shipments should start arriving from the middle of next month to May.

Australia was considered as the country that could enjoy an advantage in delivering to the southern ports but trade sources said AWB, the monopoly wheat exporter from Down Under, had not bid to provide the entire quantity.

"They have bid for a specified quantity only," they said.

A US official said last week that his country would be able to supply wheat at $140 a tonne f.o.b. Currently, AWB quotes $150 a tonne f.o.b for immediate delivery. However, freight charges from Australia are lower, while delivery time is also short. Domestic prices for wheat (dara) are ruling firm at Rs 1,000-1,025 a quintal, up from Rs 957 on February 2 when the Centre decided to resort to imports and 970 when STC floated the tender. This is in view of lower than estimated crop of 73.06 million tonnes (mt) against initial projections of 75 mt.

More Stories on : Agricultural Policy | Wheat

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