Wheat exports ruled out for now

NEW DELHI: The government has decided against wheat exports for now despite mounting pressure to allow farmers to benefit from higher prices overseas.

The decision by the empowered group of ministers (EGoM) on food, which met on Monday, could firm up global wheat prices further, but force wheat farmers to bring their produce to mandis.

The EGoM also decided to distribute 50 lakh tonnes of wheat and rice to states, proportionate to their recent offtake, for below poverty line families countrywide but put off a decision on the crucial food security law.

Wheat purchases by the states agencies were down almost 50% at the beginning of the rabi marketing season from the levels last year despite a bumper 82.4 million tonnes crop, making the inflation-scarred government jittery.

The government needs to have enough foodgrain in stocks to ensure adequate availability for the food security law that is expected to be rolled out later this years.

Officials suspect that wheat farmers are holding back their produce from mandis in anticipation of exports opening up and traders offering better prices. That the difference in procurement is down to 11 lakh tonnes after the first indications from the government that it is unlikely to open up wheat exports has reinforced this view.

State agencies have purchased 185 lakh tonnes of wheat by May 2 this year against 196 lakh tonne of wheat bought by this time last year.

Total 267,24,494 tonnes rice has been procured by the various government agencies by May 02, 2011.

The EGoM put off decision on stock taking of food grain availability for the food law until after May 13 on the contention that the Election Commission's permission would be needed because of the ongoing state elections.

Speaking to ET after the meeting, food minister K V Thomas said: "There is no big problem on this. The decision will be made at the next meeting of the EGoM after consultations with the PM, NAC chief Sonia Gandhi and finance minister Pranab Mukherjee." No date has been set for the next meeting as yet, though.

The Rangarajan committee has suggested a scaled down food security law than that proposed by the Sonia Gandhi-headed National Advisory Council.

The government is trying to reach a middle ground. Experts worry that food procurement will have to be stepped up sharply if the government takes on an ambitious obligation.

According to officials, the Food Ministry placed the reports of both the NAC and the Prime Minister's panel headed by PMEAC Chairman C Rangarajan before the EGoM for guidance. The Rangarajan Committee had raised concern over the availability of foodgrain if a large number of beneficiaries are covered under the proposed law.