Amid a relative slowdown in demand, the authorisation to export the crop from its godowns via private trade was meant to ease India’s critical pressures on storage. The allocation was be done by bidding with a floor price set at Rs14,700 (US$274) per tonne plus 12.5% state taxes.
However, the USDA has argued that this approach will “increase the implied export subsidy” if the price isn’t reduced.
Imposing conditions
This, the department added, would be compounded by the Food Corporation of India’s demand for a full advance payment before transit, calling it a disincentive for private trade.
Instead, the USDA called on the government to “explore measures for improving the viability of exports of government wheat” in the face of record storage pressure.
The Indian media has since reported insiders suggesting that the government might consider the open auction of FCI wheat at lower prices and without the stricture of conditions to end-users. This in turn could be bought either by local mill producers or by grain exporters.
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