Australia's monopoly wheat exporter AWB Ltd sent a high-level delegation to India on Monday after being told by authorities there that a wheat shipment contained high levels of pesticides. AWB spokesman Peter McBride said the delegation was sent after India told the company about high pesticide levels in the 50,000-tonne wheat shipment.
"We have no reason to disbelieve our customers. So if there's a higher reading of pesticides than was in the contract specifics we obviously need to address it," McBride said.
The shipment is the first delivery in a 500,000 tonne contract won by AWB with India in early March. Since then trade talk has been high that India will need to import millions of tonnes of wheat this year. AWB has said that it plans to bid for contracts. The first shipment in the 500,000 tonne contract travelled to Chennai in southern India early last week.
The Indian complaint keeps the heat on AWB, which is involved in a major scandal over allegations that it paid $222 million worth of kickbacks to the Iraqi regime of Saddam Hussein to secure deals.
"We look at all tenders that are released. If satisfied with the terms and conditions we'd obviously participate," AWB spokesman Peter McBride said of the Indian tenders.
AWB was accused by a UN report last October of providing $222 million in kickbacks to Saddam Hussein's regime in Iraq, breaking sanctions by washing inflated wheat contract prices through the hard-currency oil-for-food account. The Iraqi Grain Board in February suspended business dealings with AWB while an official inquiry into the alleged kickbacks went on. The inquiry is due to report on June 30.
Despite the inquiry, Ian Donges, the new head of AWB's export arm, in March said that the group had sold almost 1.5 million tonnes of wheat in new deals, including 500,000 tonnes to India. India would issue new wheat tenders soon, a food ministry official said in Mumbai on Wednesday. Further imports could amount to 3 million tonnes, Indian officials have said.
If Australia wins further Indian sales, grain would likely be drawn from a combination of the last crop and the new one, which is just about to be planted.
Dry weather persists in most of Australia's grains belt as it moves into the planting time for winter crops, normally sown in late April through May. Some plantings of early crops, particularly canola, has begun in parts of winter growing areas, although a significant autumn rain break is yet to occur in Australia's key south-east.
Unseasonably good winter rain has allowed canola and lupin plantings to begin in parts of Western Australia. Forecasts for this season's wheat crop range between 22.5 million tonnes and 24.5 million tonnes, although forecasters say good rain could push the harvest to 25 million tonnes. The wheat crop was 25.1 million tonnes last season.