In view of bulging grain stocks, the food ministry is now believed to be in favour of allowing export in small quantities.
Officials said a formal proposal for opening exports would have to come from the commerce ministry, but this time the food ministry wouldn’t object .
“We feel that almost 2 million tonnes of wheat and an equal quantity of rice could be easily exported,” the official said. If allowed, this would be first time since 2007 that grain would be exported from India without any obstruction. India had imported almost 7.3 million tonnes of wheat in 2006 and 2007, as local procurement fell short of requirement.
Till now, the food ministry was against any export of grain before the proposed Food Security Bill gets into final shape. This was necessary as its grain requirement under the Bill would have been clear only after the proposals take final shape.
“The situation has changed and in view of increased arrival of grain in mandis and bulging inventories, we feel some quantity could be easily exported,” the food ministry official said, adding a mechanism to ensure exports don’t lead to any unusual flaring in prices or a shortage is also being thought of.
According to the Food Corporation of India (FCI), stocks of grain in central warehouses totalled almost 65 million tonnes, while the total storage capacity available is around 62 million tonnes. “Of this, covered storage capacity is around 57 million tonnes, which means almost 800,000 tonnes of grains don’t have proper cover,” officials said. This could become a big problem as rain in northern India, where much of the grains are stored, is expected to arrive in full swing in the next few weeks.
The issue of export of grains from the central pool was raised during the meeting of the empowered group of ministers (EGoM) held yesterday, but was not discussed as agriculture minister Sharad Pawar was not present. Officials said the food ministry just presented the factual position on storage, arrival, price of grain and requirement.
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“It could come up in the EGoM meeting on food soon,” officials said. Agriculture minister Sharad Pawar has been in favour of grain exports in view of falling prices in most parts of the country. The chief minister of Andhra Pradesh had also requested the food ministry to press for allowing rice exports, as open market prices in the state have dropped below the minimum support price (MSP).
Agriculture ministry officials said that in many places, farmers are being forced to sell their wheat at dirt-cheap rates, as government procurement has stopped because of overflowing granaries, while traders are not purchasing because they have limited avenues to sell.
“It is for them that the government should allow exports, as it would give a floor to the falling prices,” a senior agriculture ministry official said.
He said in Gujarat, Bihar and Madhya Pradesh, the price of wheat has dropped by 15 per cent from the government announced MSP of Rs 1,120 a quintal.
“In Andhra Pradesh, farmers are forced to sell their paddy at Rs 800-850 a quintal as there are virtually no takers, while the MSP is around Rs 1,080 a quintal,” the official said.
India’s wheat production in the 2011-2012 crop marketing year is estimated at 94.11 million tonnes, up 5.6 per cent from last year, while rice production is estimated to be around 80.38 million tonnes, up 5.87 per cent from last year, the government’s third advanced foodgrain estimate showed.