21-03-2016

After Pulses, Indian Wheat imports set to rise as rains dent ouput prospects

Wheat

After pulses, India will be forced to increase the imports of wheat as unseasonal rains and hailstorms are likely to cause a shortfall of 13 million tonnes in wheat production from the initial estimates of 93.8 million tonnes in the current crop year, according to the research paper released by industry body ASSOCHAM.

“The shortfall in production may lead to a spike in the food inflation which may then contribute to the spiral of price rise, which has been tamed after a prolonged gap”, said Mr D. S Rawat, Secretary General ASSOCHAM.

According to current estimates, this year’s wheat production may drop to 79-80 million tonnes compared to government estimates at around 93.8 million tonnes which is unlikely to be achieved due to uncertain weather and threatens maturing crop, adds the paper.

“The emerging wheat situation in the country is alarming in view of the expected lower crop, depleting stocks and the erratic weather threatening crop further towards maturity,” the paper pointed out.

The consecutive western disturbances in March 2016 accompanied by hailstorm/rains are further posing a serious threat to standing crop and also the quality of wheat and its texture. If the wheat quality is impacted, government might end up with procurement of lower quality wheat in bigger volumes impacting availability of quality cereal in the open market, said Mr Rawat, Secretary General ASSOCHAM.

On the stock front, it is estimated that only around 13.37 million tonnes of wheat stocks will be left with government as on April 1,2016 and a drop of 10–20% in wheat procurement in the current year will result in around 35-36 million tonnes of wheat stocks as of 1st July 2016.

Given an average monthly requirement of 3 to 3.5 million tonnes towards Public Distribution system (PDS) and open market wheat sales, wheat stocks would plummet well below 10 million tonnes as of April 1, 2017 forcing the government to consider imports to augment domestic shortage/buffer requirements.

ASSOCHAM said the government should reduce wheat import duty to a more reasonable level of 5 to 10% so that parallel imports by private trade would ease pressure on government stocks and prices due to better open market availability. While government can import duty-free through its state trading arms private traders too should be encouraged to import wheat with lower import duty as suggested above, to check the open market prices.

Source: Commodity Online

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