Financial Daily from THE HINDU group of publications
Thursday, Jun 17, 2004
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Grain trade moots China approach on exports
Chennai , June 16
TO export or not. Currently, this is the dilemma faced by foodgrain exporters. But a section of the trade feels that it would be better to adopt the Chinese policy.
``China has a foodgrain policy that cannot be termed a bad idea. Export foodgrain when you have a surplus production and import when you face a shortage,'' a multi-national exporting firm official, who did not wish to be identified, said.
With a change in the Government after the elections last month, foodgrain exports have come to a standstill. Reports say wheat consignments have been held up at Kandla port due to lack of clear-cut policy.
The Food and Agriculture Minister, Mr Sharad Pawar, has ruled out providing stocks from the Food Corporation of India (FCI) to exporters. On the other hand, an export policy, framed by the erstwhile National Democratic Alliance Government, is yet to be put in place.
``There is dispute between the Food and Commerce Ministries on who should foot the subsidy towards exports,'' exporters said.
According to the official of the multi-national firm, China buys from the global market when it faces shortage but sells when is has surplus.
``It is necessary for the Government to decide either way on what it wants to do. A distinctive policy is required so that the trade does not suffer,'' trade sources said.
``We need to have a consistent policy. We have to emerge as a reliable trade partner in the global grains market,'' the sources said.
"China also sometimes sells superior variety of foodgrain and buys lower grade. And at times, the vice-versa happens. There is nothing wrong if such a policy is adopted," he said.
China, which began importing rice a couple of months ago, has currently stopped imports and is dipping into its domestic stocks as global prices began to firm up.
``For India, there is always a tinge of bad luck. Whenever it wants to buy from the global market, the prices shoot up and when it wants to sell, the prices fall,'' trade sources said.
Last year, when India was in the global market to sell rice and wheat, the prices ruled low. For example, rice of different varieties ruled between $160 and $200 a tonne only, while feed wheat, which was mainly shipped, was quoted at $100 and $110 a tonne. This year, when exports seem unlikely, rice prices are ruling over $220, while even feed wheat is quoted above $170.
``That's why we say there should be a long-term policy in place. This will help cut carrying costs of grains while ensuring the stocks are fresh,'' the official said.
Though wheat production has been pruned to 71 million tonnes (mt) from the earlier estimates of 76 mt, traders feel a small quantity could be exported this year. In the case of rice, they, however, expect things to be tight.
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