India grains sales grounded by lack of government policy

08 Apr, 2004

India, despite reaping a bumper grains crop, is unlikely to resume exports soon in the absence of a government policy enabling private players to begin wheat and rice sales, traders said on Wednesday.
Grain exports have been on hold since last August when the state-run Food Corporation of India stopped the subsidised sale of wheat and rice to exporters due to a fall in stocks.
Exporters had earlier expected the government, which is busy ahead of national elections starting later this month, to announce the new grains exports policy by the middle of March, clearing the decks for exports to begin by the end of April.
"Unfortunately there is nothing on the ground so far," D.P. Singh, chairman of the All India Grain Exporters' Association, told Reuters.
"I am not very optimistic on exports as there seems to be no political will as of now."
The policy will spell out measures the government plans to take following its decision in January to give private players a greater role in grain trade, including direct procurement.
Private traders are currently allowed to export wheat and rice but can only buy from procurement firm Food Corporation of India and state-run trading companies.
The decision follows government expectations of a record crop this year after excellent monsoon rains last season. In January, the government also approved reimbursement of WTO-compatible costs for grains for export.
Traders said these costs might include certain taxes, freight charges and some input costs, but detailed guidelines were still awaited.
"We have only been hearing for two months that a new policy is coming," said Atul Chaturvedi, president of Ahmedabad-based Adani Exports Ltd.
"Unless the policy is clear, the response for private grains procurement will be lukewarm."
India's new wheat marketing season began on April 1. The country is expected to produce more than 74 million tonnes of wheat, up from 65.1 million tonnes last year following the worst drought in 15 years.
The farm ministry said in February grains output in 2003/04 (July-June) was likely to rise to a record 212.2 million tonne from 174.2 million in the previous year.
Chaturvedi said private buying of wheat from farmers was proceeding in a small way in anticipation of government policy.
"Private traders would have bought about 100,000 tonnes of wheat, which is peanuts in a 75-million-tonne crop."
Singh said exporters couldn't procure in a big way, as there was a wide disparity between the international and domestic prices.

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