India may allow more wheat exports

NEW DELHI: India is considering allowing additional wheat exports to cut huge stocks at government warehouses and make room for the new season’s harvest, Food Minister K. V. Thomas said.
After lifting a four-year-old ban on wheat exports by private traders in 2011, last year the government approved 4.5 million tons of exports from its overflowing warehouses, and more than 2 million tons of this total has yet to be shipped.
Approval of yet more exports by India, the world’s biggest wheat producer behind China, will help buyers in the Middle East and Africa as leading suppliers Russia and Australia are facing falling output.
“We are considering some more exports. That is the best way to lower your huge surplus stocks when world prices are good,” Thomas said.
Despite allowing the 4.5 million tons of wheat exports from government warehouses, the state-run Food Corp. of India (FCI), the main grain procurement agency, is still struggling with mounting stocks of rice and wheat, thanks to bumper harvests since 2007.
Wheat stocks at government warehouses on Jan. 1 were 34.4 million tons, more than four times the official target of 8.2 million tons for the quarter ending March.
Similarly, rice was 32.2 million tons against a target of 11.8 million tons.
The FCI buys grains from farmers to supply cheaper food to the poor, meet any emergency need and protect growers from distress sales.
The government is also weighing the option of allowing private traders to buy wheat from FCI stocks and export, Thomas said.
Currently, the government is exporting wheat from its warehouses through state-run trading firms such as MMTC Ltd. and State Trading Corp.
Last year, wheat production rose to an all-time high of 93.90 million tons while consumption stayed the same at around 76 million tons a year.
This year’s wheat harvest, which starts from March, is likely to exceed the previous year’s level if temperatures do not rise in end-February and March, Indu Sharma, chief of the state-run Directorate of Wheat Research, has said.
Separately, Thomas said the government would prefer to wait until end-February to get a clear idea about the 2012/13 season’s sugar output before conceding to industry’s demand to raise import tax.
India has turned into a net importer of sugar for the first time in two years, despite surplus stocks at home, as global prices have slumped, prompting millers to demand an increase in the import tax to curb cheaper overseas supplies.
“We will prefer to wait, say until February, to see production for this year. At the moment, we have sufficient supplies and prices are lower,” he said.
Although India’s sugar season ends in September, crushing peaks out in March.
Sugar mills are expected to produce between 23.5 million tons and 24 million tons in 2012/13, Thomas said on Wednesday, marginally lower than the industry’s forecast of 24.3 million tons.
India consumes about 22 million tons of sugar. On Oct. 1, when the current season began, mills had around 6.5 million tons of carryover stocks from the previous year.