Wheat export ban: Government to decide between politics and excess grain

The record wheat crop of 84 million tonnes has turned into a ticking time bomb for a decision-weary UPA. Though analysts have begun mooting wheat exports to deal with India's problem of plenty, the government is finding it tough to reach a decision.

With inflation a major issue in the looming state elections, lifting the ban on wheat exports that is in place since 2007, could turn into a political hot potato although there is no shortage of wheat. But retaining the ban would force the Centre to procure a lot more grain than it could handle.

A Committee of Secretaries (CoS) examining the tricky problem has thrown its hands up after several meetings yielding no outcome. One of the CoS members has put it on record that the committee is 'paralysed because it is politically incapable of taking a decision.'

The Centre already has wheat reserves of around 17 million tonnes and the Food Corporation of India (FCI) has set a procurement target of 26.2 million tonnes for this season. This would take the government's reserves to 44 million tonnes - almost twice what it disburses annually through the public distribution system.

But with the private sector also building a wheat buffer stock of seven million tonnes, officials expect muted interest in the wheat hitting mandis from now to June. So more wheat may accrue to the FCI than its target.

"What would we do with so much wheat? We don't have the storage capacity and if there's any rain, the grain would rot," a government official said.

The Commerce Ministry has been flagging the need for a plan to tackle the impending wheat glut, which includes allowing exports, for the last three months.

But the food and public distribution ministry under the recently-inducted KV Thomas, has so far reacted with caution rather than decisiveness.

The food ministry is hoping that the Food Security Bill , hanging fire due to differences between the Sonia Gandhi-led National Advisory Council and the government, would become a reality and allow it to deploy the extra wheat.

On Monday, Thomas said the government has to 'very cautious' about allowing exports in view of lower global wheat production and the proposed National Food Security Act. But a consensus on the hotly contested food security law is unlikely soon.

"We will see what the final shape of the Bill is, but let's not lose sight of the immediate problem we have to fix," said another government official.

"We are going to be hit both ways - not exporting wheat would deprive farmers of better incomes and stockpiling it doesn't make sense when we don't know what to do with the wheat," he said.

Over the last week, Agriculture minister Sharad Pawar and Ashok Gulati, the chairperson of the Commission for Agricultural Costs and Prices (CACP), have spoken in favour of wheat exports to cash in on high global prices. Wheat prices are up 75% since last April in the wake of a bad crop for many global producers.

Uttar Pradesh-based Samajwadi Party and Rashtriya Lok Dal have asked the Mayawati government to press the Centre for an early lifting of the ban on wheat exports.

Uttar Pradesh expects a record 30 million tonne wheat crop and opposition parties have said that a delayed nod for exports won't help farmers but traders - as it happened in the case of sugar.

The government recently allowed unrestricted sugar exports up to 5 lakh tonnes because local prices had cooled off on the back of improved output.