India may export wheat as stocks bulge
Friday, 19 March 2010
NEW DELHI, Mar 18 (Reuters): India, the world's second biggest grains producer, could export 2-3 million tonnes of wheat this year, a top government planning official said on Wednesday, cautioning that domestic inflation would be a key consideration.
India's grain holdings are double from year ago with wheat stocks at 18.4 million tonnes, sharply higher than a target of 8.2 million tonnes, while rice stocks were at 26.9 million tonnes compared with a target 11.8 million tones.
Traders say India could subsidise wheat exports to shed the massive stocks of wheat and rice and reduce storage costs-a strategy adopted six years ago when India last exported significant quantities.
But Abhijit Sen, a member of the federal Planning Commission, said this would be foolhardy.
"It would be silly to export wheat with subsidy," Sen, who holds the rank of a minister and is involved in formulating farm policies, said at the Reuters Food and Agriculture Summit.
"Domestically people are complaining about high prices. You can be absolutely sure there will be huge protests if the government allows subsidised exports," he said.
Indian wheat is not competitive on the international market as local prices have risen on high government payments while Chicago wheat prices are down nearly a third from last year's peak.
Sen said the government should wait until this year's harvest was completed in May and see how much grain is purchased by official agencies before taking a decision on exports.
India's grain holdings are double from year ago with wheat stocks at 18.4 million tonnes, sharply higher than a target of 8.2 million tonnes, while rice stocks were at 26.9 million tonnes compared with a target 11.8 million tones.
Traders say India could subsidise wheat exports to shed the massive stocks of wheat and rice and reduce storage costs-a strategy adopted six years ago when India last exported significant quantities.
But Abhijit Sen, a member of the federal Planning Commission, said this would be foolhardy.
"It would be silly to export wheat with subsidy," Sen, who holds the rank of a minister and is involved in formulating farm policies, said at the Reuters Food and Agriculture Summit.
"Domestically people are complaining about high prices. You can be absolutely sure there will be huge protests if the government allows subsidised exports," he said.
Indian wheat is not competitive on the international market as local prices have risen on high government payments while Chicago wheat prices are down nearly a third from last year's peak.
Sen said the government should wait until this year's harvest was completed in May and see how much grain is purchased by official agencies before taking a decision on exports.