Wheat import order halved

Govt backtracks due to high tender prices.

Citing high prices, the government has almost halved the quantum of wheat purchase from global buyers to 511,000 tonnes from 9,20,000 tonnes.

Orders were placed today with three firms from the seven that had bid "" Cargill, Toepfer and Riaz Trading "" at a price that is still about 54 per cent higher than what the government had offered to Indian farmers a few months ago.

"The government has approved the purchase of 511,000 tonnes of wheat in a price range of $317-330 per tonne, with the average working out to $325," said an official source.

Last month, seven firms had together offered to supply 920,000 tonnes of wheat in a price range of $317-370 per tonne in the 1 million tonne import tender floated by the State Trading Corporation.

In rupee terms, the current average price works out to Rs 13,162 per tonne. This excludes port handling and transportation charges, which will be about Rs 500 per tonne. In comparison, the government paid Rs 8,500 per tonne to farmers for their wheat, including a bonus of Rs 1,000.

Even if the cost of transporting wheat from Punjab to a consumption centre in Chennai or Maharashtra, which works out to Rs 1,000 per tonne, plus the carrying cost of Rs 200 per tonne per month are factored in, domestic wheat would have cost about Rs 11,000 per tonne (on a price of Rs 9,400 which is the post-tax purchase price of Food Corporation of India) in August.

The price is about 23 per cent more than the $263 (about Rs 10,650) per tonne that suppliers had quoted for selling 300,000 tonnes of wheat in this year's first import tender that was cancelled by the government, citing high prices.

Last year, India imported 5.5 million tonnes of wheat at an average price of about $205 a tonne, after procurement fell to 9.2 million tonnes.

The government has managed to buy about 11 million tonnes of wheat from farmers, which is 1.77 million tonnes higher than last year. However, this is lower than the target of 15 million tonnes. This has led to the decision to import wheat.

Meanwhile, a US embassy statement said India had paid 10-20 per cent higher prices for wheat import last year, resulting in an extra expenditure of $65 to $85 million.

The prices being offered to India in the latest import tender are significantly higher than the purchase prices paid by other wheat importing nations recently. The US has not been able to sell wheat to India because of strict phyto-sanitary norms governing such a transaction.