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What Is India News Service
Thursday, July 20, 2006


India Intelligence Report



 

 

 

   Pawar Says There is No Wheat Problem

  Sending more confusing signals to the people, vendors, and analysts, Food and Agriculture Minister Sharad Pawar said that there was no possibility of a steep price in wheat as prices "are now stable" and that there is "no problem of stock availability."
     
 

Sending more confusing signals to the people, vendors, and analysts, Food and Agriculture Minister Sharad Pawar said that there was no possibility of a steep price in wheat as prices "are now stable" and that there is "no problem of stock availability." Pawar estimates this year's wheat production to be 69.48 million tons (mt) which is 6 mt short of target but above last year's production of 68.64mt and added that the Government has no plans to import additional wheat to meet "social commitments." He also highlighted that spot prices of wheat had fallen from Rs. 922 per quintal in February to Rs. 864.

Pawar had earlier floated international tenders for 3.5 mt of wheat and issued contracts to the Australian Wheat Board (AWB) and over 1mt had already arrived. Initial shipments were of extremely low quality, lower than India's already low levels that the Government even talked about canceling the contract. But later, it doctored reports on quality levels of those arrived and allowed AWB to send in the rest of the shipment. Later it also capitulated to demands by international companies and lowered quality specifications to receive more quotations. Additionally, it also allowed the import of wheat by private players at 5% import duty. The opposition criticizes the Government  for sleeping on the switch and trying to import wheat in an agrarian nation.

 

 

Wheat production fell off target in India because of drought and unusual warming that affected production  in Uttar Pradesh, Madhya Pradesh, Uttaranchal, Gujarat, Bihar,Delhi, Jharkhand, and Rajasthan. Although 26.5 million hectares (mha) was used to grow wheat compared to 26.3 mha, there was an estimated shortfall of 2mt in February triggering a price rise. Apparently, the Ministry realized the shortfall only in January but that estimate was too small. Increasing number of farmers are opting to grow cash generating sugarcane even in water scarce areas and not cereals. They abuse populist measures such as free electricity or allowing commercial fishing in natural water bodies by Andhra Pradesh Chief Minister Y.S.R. Reddy to pump out millenniums old underground water to grow one or two crops of sugarcane and causing an ecological disasters.

 

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