India's grain mountain grows despite push for exports

Feb 26 2013, 11:32 IST
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A dumper unloads wheat as a crane loads onto a cargo ship at the Mundra port in Gujarat September 24, 2012. (Reuters) A dumper unloads wheat as a crane loads onto a cargo ship at the Mundra port in Gujarat September 24, 2012. (Reuters)
SummaryIndian farmers will begin to harvest sixth consecutive wheat crop expected to exceed demand.

India will be unable to consume or export enough wheat and rice to rein in a record stockpile after another bumper harvest, a failure that means crops risk rotting in fields instead of being sold on world markets to cash in on higher prices.

In March, farmers in India will begin to harvest the sixth consecutive wheat crop expected to exceed demand, and when threshing is over in June the government's combined wheat and rice stocks are set to hit 100 million tonnes. That is about a fifth higher than the volume in storage a year ago.

The grain mountain is worth about $30 billion and the nation of 1.2 billion will soon have enough wheat piled up to feed its poor for a year. But in a stark example of India's corruption-plagued and inefficient food distribution and storage system, much will simply end up rotting in a country with 500 million poor, and despite a need for income from exports to reduce a record current account deficit.

The food ministry is pressing the government to increase exports, but India's creaking transport system means that a large portion of grains will simply not be able to get to ports even with global prices jumping a fifth last year.

The country's grain export facilities are working flat out, but the government will struggle to ship more than 6 million tonnes of wheat in 2013 from its stocks, while sales by private exporters will be capped at around 2 million tonnes.

If exports reach 8 million tonnes in 2013, it would make India one of the world's top 10 exporters. The volume would amount to about a quarter of the 30 million tonnes shipped by top exporter the United States.

Wheat also has to compete with booming rice exports for limited capacity on the railroads and in the ports. Like wheat, the rice crop has been abundant and the nation emerged as the world's biggest rice exporter in 2012.

"Despite our best efforts, we (India) cannot export to an extent where stocks come down to somewhat manageable levels," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International.

"The government will have to struggle with mammoth stocks. There's no way out."

That means India is unable to capitalise fully on the opportunity to export to international markets, where there is room for more Indian supply to compensate for poor harvests from major producers.

Benchmark Chicago wheat prices jumped 19.2 percent last

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