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AWB says that it has resolved
quality issues with Government
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Plans to deliver 400,000 tons
of wheat
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UN official calls for
strategic thought to increase output
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The Australian Wheat Board (AWB) announced that it has resolved quality issues
with Indian authorities and will be exporting the remaining 400,000 tons of
wheat of the 500,000 tons deal valued at USD 90 million.
AWB delivered 100,000 tons to the South Indian ports of Tuticorin and Chennai
and were found to be far below the low quality levels of India which the
company claims is merely technical. The
Agriculture and Food Ministry then
said that it will lower quality standards
even more to accommodate the wheat order even as a senior United Nations
official cautioned New Delhi not to make “panic purchases.”
UN Development Program (UNDP) official Anuradha Rajeevan said from an overall
exporter, India is on the verge of being an importer of wheat but said “The
import of grain may be a legitimate short-term measure. But there is also need
to increase domestic supplies.” She also said that “There is need for a
different strategic perspective.”
In its latest Food Outlook report, the Food and Agriculture Organization said
world wheat production was likely to decrease by 10 million tons this year and
a strong demand will drive up trade in 2006-07 to 110 million tons.
At 70-72 million tons, Indian wheat output has remained more or less stagnant
falling from its peak level of 76 million tons in 2000-01. Adding to this
problem, the government has been procuring a falling proportion of the output.
Between 2001-02 and 2005-06 there was a 10 percentage-point decline in
procurement relative to the Indian wheat crop. As the supply crisis was
brewing, the Government worsened the problem by selling 700,000 tons between
February and April in open market operations, essentially sales to private
trade. Procurement by the state’s Food Corporation of India also dropped by 38%
as private traders offered better rates to farmers.
Rather than focusing on “strategic” issues on increasing output, officials
from the Agriculture Ministry officials are focusing on manipulating price
systems by introducing a dual price system from next year. Under the new
differential price system, the government would fix minimum support price (MSP)
based on cost of cultivation and would also offer a variable rate-linked to
open market price behavior. It is not clear how the Government proposes to
frame the parameters and what these parameters will be.
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