WHEAT

GLOBAL SCENE

Global wheat trade in 2003/04 is expected to be 97.8 million tons; 7.3 million tons lower than 2002/2003 and the lowest in 17 years. The European Union is expected to import 5.0 million tons in 2003/04, due to the combined effects of the recently imposed tariff-rate quota and limited supplies from Eastern Europe and the Black Sea region. The North African countries of Algeria, Morocco and Tunisia will also import less as they have prospects for near-record production. Exports from Argentina, Australia, Canada, and the United States are all expected to increase as exports from Ukraine, Russia and India drop by 20 million tons due to lower production.

Global production is expected to rise 4.8 million tons. Larger crops in the United States, Argentina, Australia and Canada will account for an increase of 40.5 million tons over last year. Australia will have the largest production increase at 16.5 million tons, rebounding to 26.0 million from 9.5 million. Algeria, Morocco and Tunisia combined will see an increase in production by 3.1 million tons. In a reversal of last year, production in Kazakhstan, Russia and Ukraine is expected to drop by a total of 26.8 million tons. Eastern Europe and India together will have production declines of 4.5 million tons.

Global consumption is expected to be lower by 12.6 million tons, partially due to reduced supplies of low priced feed-quality wheat available from Russia and Ukraine.

Global stocks continue to fall, bringing the global stocks-to-use ratio to a 38-year low at only 22.7 percent. While higher stock levels in Canada, Australia and the United States will partially offset China’s continued draw down, they will only provide a limited reservoir of supply to the market in the event of unexpected import demand.

WHEAT SCENARIO IN INDIA

Wheat is one of the most important staple food grains of human race. India produces about 70 million tones of wheat per year or about 12 per cent of world production. Being the second largest populous country, it is also the second largest in wheat consumption after China, with a steep growing wheat demand. The major Wheat producing states in India is placed in the Northern part of the country with UP, Punjab and Haryana contributing to nearly 80% of the total wheat production.

For nearly a decade, i.e. upto mid 70’s, agricultural production had stagnated. The spectacular yield growth recorded in the post-Green Revolution years in Punjab and Haryana has receded into history. Food grain production in the frontline agricultural states of Punjab, Haryana and western Uttar Pradesh, comprising the country's food bowl, has decelerated. The miracle that began with wheat was replicated in rice. The area under production of wheat has increased from a mere 12.93 million hectares in 1960-61 to 27.49 million hectares in 1999-2000, an increase of more than 100% over the past 5 decades. The production of wheat at the same time, increased from 11 million tones in 1960-61 to 76.37 million tones in 1999-2000. The yield (kg/hectare) on the other hand, increased from 851 in 1960-61 to 2778 in 1999-2000, an increase of around 3.56 times. This indicates that although wheat production over the past 5 decades increased by 6.87 times but the yield of wheat has actually increased by only half of this figure.

Wheat production in India has increased by over ten times in the past five decades and India has become the second largest wheat producer in the world. Today, wheat plays an   increasingly important role in the management of India’s food economy. Since 1998-99 India’s share in world wheat production hovers around 11% to13%.      

INDIAN GOVERNMENT POLICY REGARDING WHEAT

Since wheat prices at procurement level and at disposal level are placed under controlled mechanism with defined objectivity, scope of general price trend analysis also becomes government policies centric. The related price in the open market has got a substantial relationship with the prices of wheat traded in the open market. Therefore our presentation on this aspect has a notion that the price elasticity of demand has got direct relationship on prices of wheat of other varieties (whatsoever be the size of share in total production). However, availability of targeted variety (Mexican/Dara) wheat shall increase, if Government withdraws gradually from procurement at minimum support price; in the open market, which shall concede volatility.

PURCHASES

The policy of Minimum Support Price (MSP) supports economic growth. MSP is a critical policy component of the Indian Economy. It generates broadly different purchasing power, health and wealth. Governments works out the MSP giving due consideration to all the economic factors like cost of input, power, capital; and labour with reasonable going margins. With the certainty about the support price, farmers expend better efforts and resources provide confidence and motivation to the growers. MSP and commodity options are consistent with the requirements of the produced economy.

PROCUREMENT OF WHEAT (CENTRAL POOL ACCOUNT)

(Figs. In Lac Tonnes)

Source : fciweb.nic.in/procurwheat.htm

STATEWISE PROCUREMENT OF WHEAT BY FCI

(In Lac Tons)

PEC’S ACTIVITIES

PEC has been in the wheat trade for quiet some time. PEC has imported wheat from Australia in the year 1998-99. When Food Corporation of India in the year 2000 offered its surplus stocks for export, PEC took the opportunity and became one of the largest exporters of wheat from India. PEC’s share in India wheat export is approx 30%. PEC has exported approx. 5 Million MT of India Wheat since the year 2000 to various Middle East and Far East destinations. The major buyers of wheat from PEC are major International Trading Companies, Roller Flour Mills and Government Procurement and Trading Agencies.

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