India in dilemma over wheat exports*****

NEW DELHI, Apr 21 (Commodity Online): India, world's second largest wheat producer remained in dilemma over whether to allow wheat exports or not as the country is caught up between huge buffer stocks of the commodity and inflation worries. India's Agriculture Minister Sharad Pawar wants to lift exports ban as the country has enough stocks of the commodity and would likely harvest a second year of bumper food grains output because of normal monsoon rains. He said country's farmers will get good returns from the prevailing high global prices would provide good returns to farmers. However, with concern over food prices growing across the nation of 1.2 billion people, the government has backtracked on its decisions about, and even slowed approvals of, grain exports. India's climbing inflation is a thorny issue for the government as the food price index climbed 9.18 per cent in the year to March 26, even though grain prices were not the key driver. India's food grain output touched a 235.9 MT in the crop year ending June. State-run warehouses are overflowing with stocks, even as the government makes preparations for storage of the newly-harvested wheat crop. Wheat shipments from the world's second largest producer could partly fill a gap in global supplies caused by a shortfall in production in key exporters and calm the international market, which has soared almost 60 per cent since April last year. In July 2009, India lifted a ban on wheat exports, but reemployed the curbs within 10 days on concerns food prices may rise as the seasonal monsoon rains fail. India has spent months deliberating sugar exports policy after an initial announcement in December. Last month, authorities finally decided to ship half a million tonnes of sugar-a tiny part of India's total output of about 25 million-but have yet to issue an official notification. Wheat exports have been banned since February 2007, when adverse weather conditions hit production and the government had to turn to costly imports. Since then, five consecutive harvests have run ahead of domestic demand and warehouses have filled. The government has had to store the grain under tarpaulin, and its bulging stocks have begun to rot. Wheat reserves swelled to 17.2 million tonnes by March 1, more than double a government target of 8.2 million tonnes. That, combined with forecasts of a record harvest of 84.3 million tonnes in 2011, has prompted industry and trade to demand that export curbs be lifted.