Move aimed at creating storage space for bumper wheat harvest ....The Government has finally decided to open up its wheat stocks for private trade to export.
The Government has finally decided to open up its wheat stocks for private trade to export.
An inter-ministerial panel, headed by Agriculture Minister, Sharad Pawar, decided to allow an additional 5 million tonnes of wheat for exports from the Food Corporation of India stocks by the private trade.
Recognised private exporters will be allowed to export 2011-12 crop through a bidding process at a floor price of Rs 1,480 a quintal.
The latest move assumes significance as the country heads for yet another bumper wheat harvest that has created pressure for the Government to create storage space for the new crop.
However, analysts said the price fixed by the Government is not workable, as the global prices are on the decline.
“Assuming domestic freight from Punjab godowns to the ports, shipping, finance and other costs of Rs 2,500 a tonne, the export price at current exchange rate of Rs 54.78 translates to $315.8 a tonne f.o.b. Indian west coast”, said Tejinder Narang, grains analyst.
The workable price for export is $280 a tonne free-on-board (f.o.b.) for soft red winter wheat of the US.
“If the Government does not align the prices to the global market, buyers will shift to wheat of other origins,” Narang said.
He further added that India’s decision to offload more wheat could dampen global wheat prices further.
Wheat prices have declined by about five per cent in the past one week on expectations of better crop in Australia and improving weather in the US.
The Government has so far allowed exports of 4.5 million tonnes by the public sector entities such as PEC, STC and MMTC.
Of this, the PSUs have so far exported 2.3 mt and private players around 2 mt, taking the country’s total wheat exports to 4.3 mt.
The country is expected to produce wheat crop of 92.3 mt this year and the harvest is likely to begin by the month-end.
As on February 1, wheat stocks in the Central pool stood at 30.80 mt, against the actual requirement of 11.2 mt.
The Government aims to procure a record 44 mt in the 2013-14 rabi marketing season starting April.