Food Secretary Sudhanshu Pandey, flanked by Commerce Secretary BVR Subrahmanyam (right) and Agriculture Secretary Manoj Ahuja, addressing the media in New Delhi on Saturday Kamal Narang KAMAL NARANG | Photo Credit: KAMAL NARANG
Food Ministry cuts 5.6 mt wheat allocation for PDS, replaces it with rice
Citing food security issues and rising domestic inflation, the Centre has banned wheat exports. The forecast of a lower crop in major producing countries was also a factor. The decision came a day after it announced a promotional visit by a delegation to nine countries to boost wheat exports.
Simultaneously, the Food Ministry reduced 56 lakh tonnes of wheat quota for some States under the National Food Security Act and reallotted rice instead to ensure increased availability of the cereal in the Central Pool stock.
In a notification issued late on Friday night, the Centre, through the Directorate-General of Foreign Trade, justified its decision saying there has been a sudden spike in prices of wheat “arising out of many factors” as a result of which the “food security of India, neighbouring and other countries are at risk”.
40% price rise
“The price rise in some parts of the country is as high as 38-40 per cent. One primary goal is to put a check on food inflation. Besides ensuring food security of the country, the government is committed to actually ensuring the food security of neighbours and vulnerable countries,” said Commerce Secretary BVR Subrahmanyam. He said of the over 7 million tonnes (mt) of wheat exported last fiscal, half went to neighbouring Bangladesh.
“In the notification issued by the DGFT, we have kept the window open for neighbours and a large number of vulnerable countries if their governments make a request. In the name of prohibition, we are directing the wheat trade in a certain direction. We do not want wheat to go in a unregulated manner to places where it may just get either hoarded or it may not be used for the purpose,” Subrahmanyam said.
Though the trade will be private (not to be supplied from government stock), the other entity requesting for wheat must be a government entity in the importing nation, he said.
The government estimate is that about 4.3 million tonnes (mt) have been contracted so far, out of which 1.2 mt was shipped in April and another 1.1 mt may go in May. If exporters have a valid order and an irrevocable letter of credit, that contract will be honoured, he said, adding that in all 4 mt may go out of the contracted volume.
He said if the estimates are revised upwards and Food and Agriculture Ministries are comfortable with the grain availability, exports could be resumed. “No order is in perpetuity,” he said, referring to the May 13 order of the Commerce Ministry.
Relief to growers
This should provide some relief to wheat growers, who are worried over the export ban. They fear that the ban could result in prices dropping below current levels of about Rs. 2,200 a quintal and even lower than the Minimum Support Price of Rs. 2,015.
Briefing media on the wheat situation, Food Secretary Sudhanshu Pandey said availability is not a problem, but the “unregulated trade” is pushing prices up. The information about lower production in different countries is leading to speculative trading.
Pandey also said that the procurement by the Food Corporation of India (FCI) could be about 18.5 mt this year against the previous estimate of 19.5 mt, which itself had been reduced from the initial 44 mt. The procurement so far is 18 mt, he said. On the heels of reallocating 5.5 mt of rice in place of wheat under PMGKAY for some States, the government also decided to reallocate another 5.6 mt under NFSA, he said, adding this would ensure 11.1 mt of additional availability with the FCI.
Yield, output down
Agriculture Secretary Manoj Ahuja said the wheat output could be 105-106 mt. Initially, a record production of 111.32 mt was estimated before being was revised to 105 mt after the crop was affected by the heatwave in March and April.
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