Wheat imports

The government has decided, for the first time in seven years, to import 30 lakh tonnes of wheat as prices rise wholesale prices rose 10.9 in the past year. The futures prices for Dec 2006 at NCDEX range between Rs 10,190 and Rs 12,000/tonne.

Why

Low procurement

By government-designated agencies, despite larger consignments of wheat arriving in the mandis. Government agencies have so far procured about 9.21 million tonne wheat, against 14.65 million tonnes in the same period last year. The average daily market arrivals of wheat has increased to 33,576 tonne, against 20,056 tonne last year, while the daily purchase by government agencies has slipped down to 380 tonne from 10,386 tonne in the previous year.

The reason is that many traders and multinational companies are purchasing wheat by offering prices in the range of Rs 7,600-9,800/tonne, while the government is offering Rs 7,000 a tonne.

When

July

Is when the maximum buffer stock norm is 17.1 million tonnes. The average monthly wheat offtake from the government stock for PDS and welfare schemes is between 1-1.5 million tonne. Buffer stock norms are fixed to cater to these needs as well as meet any possible contingency. Government-designated agencies usually plan wheat purchase with a view to meet the buffer norms. The import announcement came when the buffer fell to half of what was required.

Where

All over

Is where the 30 lakh tonnes of wheat will go. The problem area initially was southern India.

How

Global tenders

In the first one for 50,000 tonnes, only one company could qualify for the bid8212;AWB. This time, eight companies have made a bid. The second tender is yet to be decided,

The 6th What Next

Critics of the import decision claim the government had a buffer stock of 3.45 million tonne in March 2006, enough to meet PDS and welfare scheme needs till the upcoming harvest. But it decided to import initially 500,000 tonne wheat against zero duty in February 2006. Then it went on to import another 30 lakh tonnes. Now there is a chance that there will be another announcement of additional imports.

Ashok B Sharma