Govt not to allow rice export

The EGoM8217;s disfavouring of rice export is primarily based on the premise that in this fiscal, the total allocation of rice under the Targeted Public Distribution System is about 235 lakh tonnes while the requirement of rice for other schemes is about 37 lakh tonnes, thereby taking the total requirement to 272 lakh tonnes, they said. Moreover, there are demands from several state governments for increasing the Above Poverty Line allocation of rice while there was a considerable possibility that some states could seek restoration of rice allocation substituted by wheat recently, sources reasoned.

In a severe criticism of India8217;s handling of the global food crisis, the US has argued that export ban on non-basmati rice by New Delhi will harm its south Asian neighbours and drive up prices rattling the international markets. US Under Secretary of Commerce for International Trade Christopher A Padilla last week pointed out that while export bans are intended to enhance short-term food security, but by imposing restrictions these policies render the situation worse. He said export restrictions take food off the global market, drive prices higher, and discourage farmers from responding to market forces and investing in future production.

In yet another bold decision, the government has decided not to exercise call option for import of 1,80,000 tonnes of wheat during the current fiscal because of comfortable stock position. The EGoM has favoured avoiding import wheat through hedging on international commodity exchanges. The net surplus on account of hedging transactions, after accounting for payment of option premium is estimated to be more than 30 million dollars. In April, India decided to import 1.8 lakh tonnes of wheat through a call option tender from global trading firm Cargil International. The price settled for importing the wheat was 406 dollars per tonne basis carriage and freight, excluding a premium of 30-40 dollars.

A call option tender is floated wherein the buyer fixes the price at which he agrees to buy a certain quantity within a fixed time-frame. The buyer forgoes the premium if he does not take delivery of the contracted quantity. In 2006, India imported 5.5 million tonnes of wheat through global tenders to meet a domestic shortfall in procurement. Next year, the country imported around 1.8 million tonnes of wheat as procurement by state agencies failed to meet the target of 15 million tonnes.

According to official information, wheat procurement during the last week of May touched an all-time high of 212 lakh tonnes, which is nearly double of procurement in Rabi marketing season during 2007-08 which was 111.28 lakh tonnes.

The EGoM has favoured re-examining the buffer stocking policy of the government with clear division of requirement of foodgrains in the central pool for normal buffer, strategic buffer and operational stocks.

235 lakh tonnes

The total allocation under the Targeted Public Distribution System

37 lakh tonnes

The requirement of rice for other schemes