Financial Daily from THE HINDU group of publications
Friday, Feb 03, 2006
Agri-Biz & Commodities - Wheat
Industry & Economy - Exports & Imports
Govt resorts to duty-free wheat import To curb rising prices, STC to buy 5 lakh tonnes
New Delhi , Feb. 2
AFTER a gap of almost six years, India will enter the world market to buy wheat. The country will import five lakh tonnes (lt) this year to curb the rising wheat prices, especially in the South.
The public sector State Trading Corporation (STC) would be the executing body for duty free import of wheat and the import is expected to land in 60 days. India had last imported wheat in 1998-99.
The imported wheat is likely to be routed for open market sale, though the Government has a right over the wheat as it is waiving off the 60 per cent import duty.
The present wheat stock of 47 lt (as on February 1) in the Central pool is adequate to meet the needs of public distribution system and other welfare schemes till fresh procurement starts by the last week of March.
Import would be allowed only through the southern ports of Chennai, Kakinada, Tuticorin and Visakhapatnam and routed for sale primarily in Kerala and Karnataka where prices are ruling high at Rs 1,100-1,200 a quintal. In the North itself, wheat prices are showing a tendency to rise. The prices in Hapur market have increased to Rs 957 a quintal from Rs 890 on Monday for the dara variety. On January 13, it hit a record of Rs 1,102.50.
"We are quite concerned about the situation in the southern States... We would import 5 lt of wheat initially," the Union Minister for Agriculture, Consumer Affairs, Food and Public Distribution, Mr Sharad Pawar, said here on Thursday.
About the source of import, Mr Pawar said it was for STC to decide, and added that the corporation would execute the order within a day or two.
"Our expectation is that the wheat import consignment would take about 60 days to reach these ports," he said.
He said if required, more wheat would be released to the open market.
Allaying fears that the decision was taken on apprehension of low wheat stock, Mr Pawar said as a result of pumping in of the commodity in the market, prices have come down sharply.
Costs incurred to transport wheat from the North were high, he said.
The Minister said wheat output was estimated at 74-75 million tonne (mt) during the current Rabi season and wheat prices were expected to decline in June or July, both in the domestic and the international market.
"Wheat procurement would start March-end onwards. We generally procure one mt a day. We expect to procure 160 lt of wheat for 2006-07," he said. In 2005-06, wheat procurement was about 148 lt and 168 lt in 2006-07.
On whether the country would undertake further wheat imports, Mr Pawar said: "The situation would be reviewed in May. If required, just to maintain buffer stock we will take a decision (to import)."
"Wholesale wheat prices have declined across the major wheat consuming areas. The prices are down in Bihar (by Rs 60 a quintal), Jharkhand (by Rs 50), West Bengal (by Rs 35), Uttar Pradesh (by Rs 85), Tamil Nadu (by Rs 200), Gujarat (by Rs 110), Madhya Pradesh (by Rs 100) and by Rs 100 in Mumbai and Delhi," he said.
Asked why the Government was not able to assess the wheat situation earlier, Mr Pawar said: "The consumption pattern in South India is changing and there is increased wheat consumption."
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