Bloomberg News

India May Export Wheat to Iran as State Inventories Swell

May 18, 2012

India, the world’s second-biggest wheat grower, is considering exports from government stockpiles to countries including Iran to make room for a record harvest, a food ministry official said.

The prime minister or a panel of ministers will decide, the official said, asking not to be identified because of government rules. He declined to elaborate.

Wheat exports from state inventories will need to be subsidized as the government’s procurement cost is higher than international prices, T.P.S Narang, an adviser at the New Delhi- based grain exporter Emmsons International Ltd. (EMSI), said by phone from the city today.

Iran, facing international sanctions over its nuclear program, is seeking to buy rice, wheat and raw sugar from India, Yahya Ale-Eshagh, president of the Tehran Chamber of Commerce, Industries and Mines, said in an interview in New Delhi on May 7.

The country needs 1 million metric tons of raw sugar and about 1.25 million tons of rice from overseas markets, Yahya said. The Indian and Iranian governments are negotiating quality norms for possible wheat supplies, he said.

“The two nations are yet to sort out quality issues,” Narang said.

India is considering a proposal to export wheat from government stockpiles and to sell additional grains locally at below-market rates to make space for new crops, Food Minister K.V. Thomas said on May 10.

State reserves of rice and wheat jumped 20 percent to 71.12 million tons as of May 1 from a year earlier, the Food Corp. of India estimates.

Record Production

The wheat crop will probably reach a record 90.2 million tons in the year to June 30, up from 86.9 million tons a year earlier, while the rice harvest may gain to a record 103.4 million tons from 96 million tons, the farm ministry says.

The country scrapped export bans on non-basmati rice and wheat in September after more than three years.

State Trading Corp. invited bids on May 11 from overseas buyers for exports from Food Corp.’s reserves for shipment in the six months ending Dec. 31. The trading company plans to ship the grain from Kandla with a minimum vessel-load of 20,000 tons and from Mundra with a minimum load of 30,000 tons, it said.

India’s government, the country’s single biggest buyer of food grains, has purchased 30.34 million tons of wheat from farmers as of today, compared with 23.96 million tons a year earlier, the food ministry said.

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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