Trade executives say bulk of target has to be achieved post-haste as global easing of prices may leave govt with little time
The Commission for Agricultural Costs and Prices (CACP) has suggested that the government should push aggressively for wheat exports of a record 10 million tonne from its
reserves in the next fiscal before global prices drop on fresh supplies. Time is, however, running out for the government as trade executives expect global prices to ease significantly from July when spring wheat supplies from the US, a key exporter, flood the market. Moreover, the executives remain sceptical about the country's ability to export 10 million tonne in 2013-14, considering dwindling cost-advantage and limited domestic port capacity.
Global wheat production is expected to rise 5.5% in 2013-14 to 690 million tonne compared with a 6% drop in 2012-13, according to the latest estimate of the International Grains Council. Global wheat prices have already started moderating, albeit at a slow pace, responding to the forecast of a better crop next year. After soaring about 32% until November on
smaller harvests in the US, Russia and the Ukraine due to dry spells, wheat prices ended the year with a 26% gain.
India, the world’s second-biggest wheat producer, has allowed wheat exports of 4.5 million tonne from its central reserves since July, of which 1.35 million tonne has been shipped.
“A 10-million-tonne export target of wheat can be achieved in the 2013-14 fiscal, if the government acts aggressively and quickly,” CACP chairman Ashok Gulati said in the pre-budget proposal document submitted to finance minister P Chiadambaram. Considering an average price of $300 per tonne, the exports can fetch as much as $3 billion of foreign exchange, he said. The move would also help ease space for fresh crops and save inventory costs.
The CACP chief said that the government needs to decide on wheat exports early as global prices may not stay at elevated levels for long.
“Our estimate is, between December 2012 and June 2013, Russia and the Ukraine may together export nearly 2 million tonne of wheat compared with 11.6 million tonne a year before. This leaves enough room for Indian supplies if the government acts swiftly,” said a senior executive at a global trading firm.
“(However) Exporting 10 million tonne from official reserves in 2013-14 is wishful thinking, as our exports hinge on cost competitiveness, which may change dramatically after July, as well as