Agriculture Minister Sharad Pawar today denied imposing any restriction on private traders for buying wheat from farmers, but senior officials maintained that instructions were issued last month to three major traders to go slow on their purchase to give a headstart to state-run buyer Food Corporation of India.This comes at a time when the harvest has not been good in other wheat-producing areas in the world and there is likelihood of a global scramble for the grain. World production has been dropping from a peak of 629 million tonnes in 2004-05 to 593 million tonnes in 2006-07.In contrast, India’s wheat output in 2006-07 would cross 72.6 million tonnes against 68.5 million tonnes last year, according to Pawar.The minister claimed that the government had not restricted any trader, including multinationals, from buying wheat. “The farmers are free to sell wheat to whosoever they like,” he said. But early last month, Glencore, Cargil and ITC were told by the Finance Ministry to delay wheat procurement to let FCI do the first purchase from the farmers, said sources. This was meant to send a signal to the farmers to offload their produce to FCI instead of waiting for the private buyers’ entry into the market, they added. The FCI has set a procurement target of 15.1 million tonnes for this year, of which it has managed to buy 7.8 million tonnes or a little over half. Though the main procurement season starts next month, officials say that the FCI may end up importing 2 million tonnes to meet the buffer stock target and supply the grain though ration shops.Pawar said though the FCI would buy up to the “last grain” brought to the market, the government would not hesitate from importing wheat if required. But in the world market, wheat prices have been rising because of the constant drop in output. And in the six out of last seven years, production has been lower than consumption. Globally, at the end of 2006, stocks were the lowest at 119 million metric tonnes, enough to feed the world for just 10 weeks. The main hit came from Australia, which suffered one of its worst droughts that pulled production down by 58 per cent. Incidentally, India imported the maximum grain from Australia just before the drought ravaged its new crop.Production fell in EU countries because of high temperatures in July. The only two countries with good harvest were Canada and Argentina, both exporting 20-30 per cent of their produce. The US wheat production was normal but not exactly favourable for India — most of it is soft white wheat. India also has a host of plant health issues with the US, and despite serious lobbying, not a single US company qualified for the bid in the 5.5 million tonnes of imports. This year, India is likely to import 2-3 million tonnes, becoming a net importer after being an exporter for the last six years. Last year, India’s demand from the world markets was offset by a 3 per cent decline in demand from EU and Russia. But this year, global prices are already up — the price for wheat of Black Sea origin is $235 a tonne, and overall, landed costs could well be above domestic prices, traders say.
