Drought continues to play havoc with the Indian agriculture sector. 500,000 tonnes of wheat will be imported from Australia and France between July and September after Indian flour mills inked deals, two trade sources revealed. The reason being poor domestic supply.
A survey undertaken by Reuters showed that India’s wheat exports between 2016 and 2017 were likely to skyrocket to 2.75 million tonnes. A five-fold increase. The report identified a severe El-Nino induced drought and unseasonal rains as the main causes for low domestic output. The lowest since 2011.
Forecasts now, however, range between 2 – 5 million tonnes with a few traders raising their outlook. There is also a possibility that the Indian government might reduce or do away with a duty of 25 percent on wheat imports according to some traders.
Majority of the deals inked for the Australian prime wheat said to contain 12.5% protein content is said to cost between $237 and $243 per tonne. The price includes freight and cost. The price for French wheat which contains 11% protein, on the other hand, is between $200 to $205 per tonne.
“I know deals have taken place for import of wheat. Traders have contracted 3,00,000 tonnes of wheat from Australia and France and the shipments will reach here between July and September,” Roller Flour Millers’ Federation of India Ex-President M K Datta Raj told PTI.
So far millers have procured a total of 350,000 tonnes of Australian wheat and 150,000 tonnes of French wheat.
While the official target for wheat output is 94 million tonnes, India’s wheat output is likely to be at least 5 million to 6 million tonnes lower. Due to the second year of drought and unseasonal rains.
Last year, the country’s total output was 86.53 million tonnes of wheat.
The government is yet to meet targets when it comes to purchasing for supplies to the public distribution system and buffer stocks. Against the target of 30 million tonnes so far, the government has procured 22.8 million tonnes.
“Initially the government was aiming to buy 30 million tonnes of wheat from farmers this year, but the trend so far suggests that wheat buying is far behind last year’s procurement of about 28 million tonnes,” said a leading New Delhi-based trader who did not wish to be identified.
Though traders revealed that if the government had not stocked huge piles of wheat over the last few years of bumper harvest the import volumes would have been higher.
Recent government purchases of new-season wheat bumped up the national stocks of the grain to 31.4 million tonnes as of May 1, according to official data, more than four times the target of holding 7.4 million tonnes in buffer stocks.