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India likely to export 18 mln tonnes rice, wheat in 2013/14 - govt adviser
Feb 25, 2014

India is likely to export about 18 million tonnes of rice and wheat in 2013/14, the government's adviser on farm prices said, as the world's second-biggest producer of these grains looks for ways to handle another record crop.

Ashok Gulati also suggested India should release 15-20 million tonnes of the grains for open market sales to cut massive mounds of stocks and help ease food inflation.

India, the world's biggest rice and wheat producer after China, exported 22 million tonnes of the grains in the last fiscal year to March 31, 2013 after New Delhi lifted a four-year-old ban on overseas shipments of the staples in late 2011.

"Exports of 2012/13 and likely exports this year mean 40 million tonnes of shipments. You look at whatever historical data you have, India has never ever done that," said Gulati, chairman of the Commission on Agricultural Costs and Prices.

Gulati has advocated regular exports of rice and wheat from India. Rising rice exports helped India replace Thailand as the world's top rice exporter and wheat shipments picked up at the expense of rival suppliers Russia and Ukraine.

Unlike wheat, India does not export rice from government warehouses but shipments totalled about 10 million tonnes in 2012/13 and Gulati said they may be 11 million tonnes this year.

Global wheat prices fell 25.6 percent to $6.05 a bushel in 2013 due to oversupply, with benchmark Chicago futures still hovering around that level.

Global rice supplies are seeing a sharp increase as the embattled government of Thailand rushes to liquidate its stockpiles in order to pay farmers and avoid further protests.

Benchmark Thai rice prices fell as much as 15 percent last week.


Despite its export push, India sits on huge stocks of grains, thanks to bumper harvests since 2007. It took steps to boost production after unfavourable weather conditions hit the 2006 wheat harvest, forcing India to import large quantities from Australia at sky-high prices.

Stocks at government warehouses are still 2.25 times more than targets and lack of storage means much rots away even though India tries to provide cheap food to about 800 million.

"We have been recommending to the government to immediately liquidate 15-20 million tonnes of rice and wheat. Holding on to such high stocks is unnecessary," said Gulati, who is about to leave office after a nearly three-year term as the adviser.

The government buys rice and wheat from local farmers at a fixed price which is raised every year to encourage production, build stocks to supply subsidised food and meet any emergency needs such as a sudden spike in prices.

Hefty production and higher purchases by the government inflate the subsidy bill, which the government has pegged at 1.15 trillion rupees ($18.53 billion). Food Minister K.V. Thomas has said the subsidy could touch 1.3 trillion rupees, a major worry for the government as it tries to rein in public finances.

Stocks are going to swell further as India's harvest from the current crop year to June 2014 is forecast to be a record 263.2 million tonnes of grains.

Despite rising production, local prices of grains have jumped because government purchases leave only a small surplus in the market.

Domestic prices of rice and wheat combined rose 11.42 percent in January from a year ago, helping to push up food inflation to 9.90 percent, government data showed.