New Delhi: India will offer 5 million tonnes more wheat for export direct to private traders, ministers said on Thursday, doubling volumes to a record high, as part of efforts to avoid stocks rotting and make room for the new harvest.

Food minister K.V. Thomas said the extra volumes would come from the 2012 harvest and would have a floor price of 14,800 rupees ($270) per tonne plus taxes—a level, traders said, equated to around $314 per tonne free on board (FOB).

The world’s second-biggest producer is trying to cut massive stocks built up after bumper harvests and has already allowed 4.5 million tonnes of exports via tenders by state-run firms. It will push shipments ahead of June, when global prices are likely to plummet with the arrival of Black Sea wheat.

“We have allowed these additional wheat exports for private trade for three months," Thomas told reporters.

But shifting such huge volumes in India—a third of what the top exporter, the United States, ships in a year—will put a big strain on rail and port capacity, so the government has said it will prioritize wheat shipments.

India has built up huge grain mountains to supply cheap food to the poor, but lack of sufficient secure storage makes them vulnerable to damage by rains and pests.

The 2013 wheat harvest gathers momentum in April and farmers are expected to produce 92.3 million tonnes, the sixth straight year of output surpassing domestic demand of about 76 million tonnes. This harvest does not come under the export scheme.

“We will review the situation after three months," Thomas added. Reuters

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