nballa Posted February 25, 2013 Posted February 25, 2013 ------ SINGAPORE/NEW DELHI (Reuters) - India will be unable to consume or export enough wheat and rice to rein in a record stockpile after another bumper harvest, a failure that means crops risk rotting in fields instead of being sold on world markets to cash in on higher prices. In March, farmers in India will begin to harvest the sixth consecutive wheat crop expected to exceed demand, and when threshing is over in June the government's combined wheat and rice stocks are set to hit 100 million metric tons (110.23 million tons). That is about a fifth higher than the volume in storage a year ago. The grain mountain is worth about $30 billion and the nation of 1.2 billion will soon have enough wheat piled up to feed its poor for a year. But in a stark example of India's corruption-plagued and inefficient food distribution and storage system, much will simply end up rotting in a country with 500 million poor, and despite a need for income from exports to reduce a record current account deficit. The food ministry is pressing the government to increase exports, but India's creaking transport system means that a large portion of grains will simply not be able to get to ports even with global prices jumping a fifth last year. The country's grain export facilities are working flat out, but the government will struggle to ship more than 6 million metric tons of wheat in 2013 from its stocks, while sales by private exporters will be capped at around 2 million metric tons. If exports reach 8 million metric tons in 2013, it would make India one of the world's top 10 exporters. The volume would amount to about a quarter of the 30 million metric tons shipped by top exporter the United States. Wheat also has to compete with booming rice exports for limited capacity on the railroads and in the ports. Like wheat, the rice crop has been abundant and the nation emerged as the world's biggest rice exporter in 2012. "Despite our best efforts, we (India) cannot export to an extent where stocks come down to somewhat manageable levels," said Tejinder Narang, adviser at New Delhi-based trading company Emmsons International. "The government will have to struggle with mammoth stocks. There's no way out." That means India is unable to capitalize fully on the opportunity to export to international markets, where there is room for more Indian supply to compensate for poor harvests from major producers. Benchmark Chicago wheat prices jumped 19.2 percent last year as adverse weather conditions reduced harvests from Australia and Russia, the world's second and third largest exporters. Wheat was the best-performing commodity on the Thomson Reuters-Jefferies CRB index in 2012. Storage space of 47 million metric tons can accommodate less than half of the expected stockpiles, and the rest will sit under tarpaulins in the open. Wheat consumption and exports from government warehouses will likely account for around 82 million metric tons of India's 92.3 million metric tons of output in 2013. Additional 2 million metric tons of exports by private traders will leave a surplus of around 8 million metric tons. India produced a record 105.31 million metric tons of rice last year, while domestic consumption stood at around 90 million metric tons. The government has so far given permission for 4.5 million metric tons of wheat exports from state storage in 2012/2013. It will likely raise that to 6 million metric tons but beyond that the permits may be no more than a paper solution as there is no real capacity to ship more out unless the bureaucrats push for wheat to have priority over rice exports. A food ministry official, who declined to be identified, said his ministry was pressing the cabinet to allow India to export as much as possible while prices are firm. RISK FROM PESTS India's grain stockpile has grown rapidly over recent years, thanks to near-perfect weather and the government's commitment to buy the entire quantity of wheat and rice brought to market in a bid to support farmers. Wheat stocks alone will be about 64 million metric tons in June, 16 times the state target for the time of year, said two government sources responsible for grain purchases and storage who declined to be identified as they are not authorized to speak to the media. As India gears up to buy a record 44 million metric tons of wheat from the latest harvest, the Food Corporation of India has been building platforms of wood and cement for storage. These are no match for purpose built grains warehouses and silos and leave supplies exposed to rodents and the weather. In previous years, images of rotting grains in faded bags has stoked stinging criticism of the government which is now under pressure to trim stockpiles. PORT CONGESTION "Port congestion is an issue as cargoes have to wait, adding to exporters' costs and delaying deliveries," said Sanjeev Garg, chief executive at agricultural products trading company CommCorp International in New Delhi. Even though Indian wheat exports account for a small fraction of the global trade of 140 million metric tons, shipments from the South Asian nation have already helped ease tight supply of lower quality grains. The latest tender for Indian government wheat was awarded at $312 per metric ton. Australian supplies, which are higher quality varieties, typically cost $20-40 per metric ton more, traders said. India has little competition right now for its wheat, which is bought by Thailand, South Korea and Taiwan as animal feed while some southeast Asia countries blend it with milling wheat to bring the cost down.
Jersey #10 Posted February 26, 2013 Posted February 26, 2013 Why is that ridiculous? if you mean ridiculously good then ya
Clarke Posted February 26, 2013 Posted February 26, 2013 Every 2 bit economic expert has shouted one word for the past decade from the top of his/her roof: INFRASTRUCTURE. BTW shouldn't the govt release some excess grain in the market to lower prices by virtue of increased supply ?
Raghav_12 Posted February 26, 2013 Posted February 26, 2013 Every 2 bit economic expert has shouted one word for the past decade from the top of his/her roof: INFRASTRUCTURE. BTW shouldn't the govt release some excess grain in the market to lower prices by virtue of increased supply ? Lack of infrastructure is going to hit India even more and even worse in coming years. India has touched the ceiling of development that could have been achieved with the level of infrastructure we have. Now, it is going to pose as severe bottleneck. Vajpayee govt had realized that and had started ambitious plans like golden quadrangle etc. But this UPA govt didn't move an inch in last almost 10 years. On second part, govt can't reduce grain prices below minimum support prices that it offer to farmers. Prices below that would be suicidal,literally, for farmers.
Crookbond Posted February 26, 2013 Posted February 26, 2013 Lack of infrastructure is going to hit India even more and even worse in coming years. India has touched the ceiling of development that could have been achieved with the level of infrastructure that we have. Now' date= it is going to be severe bottleneck. Vajpayee govt had realized that and had started ambitious plans like golden quadrangle etc. But this UPA govt didn't move an inch in last almost 10 years. On second part, govt can't reduce grain prices below minimum support prices that it offer to farmers. Prices below that would be suicidal,literally, for farmers. Typical 'jugaad' based solutions will always lead to this scenario unless we change the core thought process of our planning.
Tiger80 Posted February 26, 2013 Posted February 26, 2013 Lack of infrastructure is going to hit India even more and even worse in coming years. India has touched the ceiling of development that could have been achieved with the level of infrastructure we have. Now, it is going to pose as severe bottleneck. Vajpayee govt had realized that and had started ambitious plans like golden quadrangle etc. But this UPA govt didn't move an inch in last almost 10 years. On second part, govt can't reduce grain prices below minimum support prices that it offer to farmers. Prices below that would be suicidal,literally, for farmers. Side effect of democracy.People are interested in short term incentive rather than understanding need for long term base
Clarke Posted February 26, 2013 Posted February 26, 2013 Vajpayee govt had realized that and had started ambitious plans like golden quadrangle etc. But this UPA govt didn't move an inch in last almost 10 years. Honest question: What are the other infrastructure projects/investments that the NDA govt invested in ? Golden Quadrilateral was obviously the most visible one, what else happened then and didn't happen in UPA-I/II ?
yoda Posted February 26, 2013 Posted February 26, 2013 Why is our govt in the business of stockpiling grains? Shouldn't that be between the producers and the consumers?
The Outsider Posted February 26, 2013 Posted February 26, 2013 Lack of infrastructure is going to hit India even more and even worse in coming years. India has touched the ceiling of development that could have been achieved with the level of infrastructure we have. Now, it is going to pose as severe bottleneck. Vajpayee govt had realized that and had started ambitious plans like golden quadrangle etc. But this UPA govt didn't move an inch in last almost 10 years. On second part, govt can't reduce grain prices below minimum support prices that it offer to farmers. Prices below that would be suicidal,literally, for farmers. Infrastructure, or the lack of it, hurts the country on so many counts. And no one seems to be bothered about it. It's not even a peripheral talking point in any elections. Our highways are nonexistent except on a few stretches of a few hundred miles here and there. The railway system is outdated and archaic beyond belief. The use of waterways for transportation is not exploited in any meaningful manner. Waste disposal, city planning nothing happens with any medium term goal in mind forget about long term planning. Even the latest revamp of certain airports has been superficial and 10 years down the line we would be revamping them again.
PBN Posted February 26, 2013 Posted February 26, 2013 This happens year after year especially in grain surplus state like Punjab. The grains need to distributed quicker instead of just being stored. There is lack of modern silos and though there has been recent private development of storages but the time required to pass these storage warehouses by the government is taking a long time. [ame=http://www.youtube.com/watch?v=Y6ZUUSh1rqU]Is the Punjab grain problem man made? - YouTube[/ame] [ame=http://www.youtube.com/watch?v=Olf5LCJW9vc]Why is grain rotting in the open yet again? - YouTube[/ame]
Raghav_12 Posted February 26, 2013 Posted February 26, 2013 Honest question: What are the other infrastructure projects/investments that the NDA govt invested in ? Golden Quadrilateral was obviously the most visible one' date=' what else happened then and didn't happen in UPA-I/II ?[/quote'] Didn't mean to turn it in to UPA vs NDA thing and my comment was more perception based. However there are couple of other initiatives I immediately recall which were talked about that time but didn't take off later. One is privitization of Rail Freight Industry (participation of private players) in competition of Concor with a network of ICD (inland cargo depots) . Other one is interlinking of rivers which would have enabled transport through water. Point here is that all these things are not even talking points at time of election.
surajmal Posted February 26, 2013 Posted February 26, 2013 No vote gain to be had with infrastructure development (atleast not until middle class reaches a critical size).
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