Bulging stocks prompt govt to double wheat import duty WHEAT STOCKS

The Centre’s decision to double the import duty on wheat to 20 per cent just before the rabi planting season is not only meant to shore up prices and send a positive signal to farmers to boost planting, but is also reflective of comfortable carryover stocks in government godowns.

Sowing of wheat in the 2017-18 rabi season till last Friday has been around 25 per cent less than the area covered during the same period last year and almost 60 per cent less than the usual acreage during this time of the year. Acreage of mustard, the other big rabi crop, is also less than last year.

According to industry players and experts, wheat stocks in the country by the end of 2017-18 are projected at a comfortable 12-13 million tonnes against less than 8 million tonnes a year ago when offtake in the open market was lukewarm as traders and flour millers received better deals outside.

In 2017-18, according to trade estimates, wheat sales through open market operations of the Food Corporation of India (FCI) are expected to be less than 1 million tonnes, lower than the 3-3.5 million tonnes last year.

The hike in import duty alongside a ~100 per quintal increase in the minimum support price (MSP) for the 2018-19 crop marketing season have ushered in a positive price sentiment.

“But much will depend on how prices behave over the next few months. Despite hiking the duty, imports will not As ofApril 1 17.83 2015 (million tonnes) 14.53

2016

abate much because the MSP hike will negate the impact of higher duty,” said Tejinder Narang, a commodity analyst.

He said another 0.5-0.6 million tonnes of wheat might be imported into the country till March. Industry sources said 2.5 million tonnes of wheat had been imported in by non-state agencies so far in 2017-18.

Some traders, though, said the duty increase would curb cheap imports and maintain the balance in the market.

But any relaxation in import duties could have led to a stock build-up, depressing prices on the eve of the peak sowing season. India produced a record 98.38 million tonnes of wheat in 2016-17 on an improved acreage, bouncing back from a low of 92.29 million tonnes the previous year.

A better harvest also improved the government’s procurement, which had declined sharply in the previous year.