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India chases record local wheat purchase

India chases record local wheat purchase
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First Published: Tue, May 06 2008. 11 50 PM IST
Updated: Tue, May 06 2008. 11 50 PM IST
New Delhi: India may snap up a near-record 20 million tonnes (mt) of wheat from farmers in 2008, sharply up from a year ago, after the government hiked its purchase price, hoping to avoid costly imports, a senior government official said.
Forecasts of higher wheat output in leading exporter Australia and a bumper crop in major producer India have helped ease global prices, a fall that has discouraged private Indian buyers from entering the market and outbidding state agencies.
World wheat prices on the Chicago Board of Trade leapt by over 160% between mid-2007 and February this year, but have fallen by around 40% since then.
Alok Sinha, chairman and managing director of the Food Corp. of India (FCI), the country’s main foodgrains buyer, said in an interview that the government has already bought 17mt of wheat and was certain of bagging another 2mt. “Yesterday, we did almost half a million tonnes and if this trend goes on, we might touch 20 million tonnes,” he said on Tuesday. Late last week, Sinha had said his agency had bought 15.4mt of new season wheat and expected to mop up a total of 17.5mt, a target which has almost been achieved. Last year, the country managed to buy just 11.1mt from farmers—against a target of 15mt—and had to scour global markets for a second year to top up buffer stocks that it uses to feed the poor through the public distribution system and ease price shocks.
The main reason for the shortfall was aggressive buying by private traders looking to cash in on fast rising prices of the grain internationally.
In an effort to avoid imports this year, the government raised the minimum support price it pays farmers for wheat to Rs1,000 per 100kg, from Rs850 last year. Officials have already ruled out the need for imports this year.
India bought a record 20.6mt of local wheat in 2002. The world’s second biggest producer, it is expected to harvest an all-time high crop of 76.78mt against 75.81mt produced last year.
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First Published: Tue, May 06 2008. 11 50 PM IST
More Topics: India | Wheat | Price | Money Matters | Commodities |