The Hindu : Front Page : Centre to import wheat at Rs. 16 a kg

Online edition of India's National Newspaper
Tuesday, Sep 04, 2007
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Centre to import wheat at Rs. 16 a kg

Gargi Parsai

Against just Rs. 8.50 a kg paid to domestic farmers; imports, it says, are for “building stocks”

With mid-term polls likely, the Government does not want to take chances
Global prices said to have shot up because of lower production in Russia and Ukraine

NEW DELHI: The Centre is going to import 7.95 lakh tonnes of wheat at a weighted average price of $ 389.45 per tonne (about Rs. 16 a kg), as against Rs. 8.50 a kg minimum support price paid to domestic farmers for wheat bought from them for the Public Distribution System. The imports are for “building stocks”, but observers say that with the possibility of mid-term elections, the Government “does not to want take chances”.

An Empowered Group of Ministers (EGoM) chaired by External Affairs Minister Pranab Mukherjee approved here on Monday the recommendation of the State Trading Corporation on the bids received. Monday was the last date for validity of the bids.

Three companies have won the bids: Swiss Glencore AG will supply 7.4 lakh tonnes of wheat. It will deliver 5.2 lakh tonnes at Mundhra port in the price band of about $ 385 a tonne for October delivery, $ 387 a tonne in November, and $ 390 a tonne in December. It will deliver 2.2 lakh tonnes at Kandla port at $ 388 a tonne in October and $ 391 a tonne in November.

German firm Alfred Toepfer has bid for delivery of 50,000 tonnes at Chennai. A grain trading company from Singapore — Starcom Resources — has also won a bid for delivery of 5,000 tonnes at either Mumbai or Chennai.

In July, the country had placed orders for import of 5.11 lakh tonnes of wheat at $ 325.59 lakh tonnes after cancelling an earlier decision to import at about $ 263 a tonne, inviting the wrath of the opposition Bharatiya Janata Party.

In for criticism

With the current open market rate of wheat hovering from Rs. 10.20 paise a kg to Rs. 12 a kg and the domestic support price at Rs. 8.50 paise a kg, the Government is in for more criticism for importing wheat at Rs. 16 a kg. There are questions about why the Government did not buy its requirements from the domestic market when the production of wheat this year is a whopping 74.75 million tonnes, against 69 million tonnes last year.

The international price of wheat has more than doubled between last year -- when the first tender for 5 lakh tonnes of wheat was floated for $ 178.75 a tonne -- and now. Government sources said they have to buy wheat from abroad to build stocks just in case there is a bad monsoon next year. Global prices are said to have shot up because of lower wheat production in Russia and Ukraine.

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