The Financial Express (India)
Column by Sanjeeb Mukherjee
July 15, 2009

www.financialexpress.com

Monday was not a good day for farmers looking to tap world markets for a higher return on their produce. First, the minister of state for commerce, Jyotiraditya Scindia, rejected any proposal to lift the ban on non-basmati rice exports and then later in the evening, the government, in a move which can only be described as panicky, rescinded a ten-day-old order to export around 9 lakh tonnes of wheat through three state-run trading firms.

Both the decisions were taken with a view to shoring up domestic stocks of wheat and rice in light of the expected fall in kharif and rabi foodgrains production due to deficient rainfall. While the decision may be a psychological boost to the government, it is hardly good news for an already beleaguered farmer who is now denied the benefits of global trade.

And exports of wheat and rice, in any case, are a very small proportion of total inventories. In the case of wheat, just around 9 lakh tonnes is exported while as of June 1, 2009, India’s wheat inventories with state agencies stood at 320 lakh tonnes.

So, an export order of 9 lakh tonnes would not have impacted price sentiment in the market. In any case retail wheat prices have been stable at around Rs 10 to Rs 13 per kilogram in most centres for the last two years and with global wheat prices showing a downward trend, there was little possibility of massive exports anyway.

The situation with rice is not dissimilar. The government has more than 200 lakh tonnes of stock, but has done nothing to allow the export of non-basmati rice or to lower the minimum export price of basmati rice.

If allowed, there would not have been any significant dent in availability, as in a normal year also, India exports just around 60-70 lakhtonnes of rice, including the premium ‘basmati’ varieties.

Incidentally, the international price of rice, is tipped to reach around $700 per tonne in the next few months, up from the current levels of $580 per tonne. Thailand, the world’s largest rice exporter, recently, decided to export rice from its huge stockpiles. India should surely allow its aam farmers to do the same.

—sanjeeb.mukherjee@expressindia.com

http://www.financialexpress.com/news/Column-Making-a-mountain-out-of-the-food-export-molehill/489239/