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Rediff.com  » Business » Wheat exports to Egypt a non-starter: Traders

Wheat exports to Egypt a non-starter: Traders

April 21, 2003 14:37 IST

The understanding reached with Egypt leading to the country opening up its wheat market to India has been termed of "little importance", with traders here saying exports to that country are a non-starter due to price related issues.

"Egypt has not relaxed its quality norms for export, including the requirement for Karnal-bunt free wheat, supplying them this category will not be feasible price-wise," market sources told PTI.

Egypt allowing Indian businesses to participate in its government floated wheat tenders does not mean they will be able to make successful bids, they said adding US and Russian wheat will be much cheaper.

They said wheat is not segregated in India on grounds of it being free from Karnal-bunt fungus and specific areas will have to be scouted to source this quality.

Food Corporation of India's wheat procurement in Madhya Pradesh and Rajasthan where this specific category is likely to be found is limited.

Direct procurement by traders for export purpose will be a costly affair as Madhya Pradesh's deshi wheat is selling in wholesale markets at Rs 11,000-12,000 a tonne.

An exporter may be able to procure it at Rs 7,000-8,000 a tonne translating into $146-166 per tonne, fobbing or miscellaneous activities leading to the loading of shipment will cost another $7-8.

Indian wheat at $175 Free on Board will be outbid in any Egyptian tender when that country has just bought Russian wheat at $128, Cost and Freight and the US wheat at $145 FoB.

When contacted, government officials conceded that Egypt is a large market of around 7 million tonnes and it will require much more than clearance of a few samples to actually explore its wheat trade.

Egypt has been buying wheat from the US at $170 a tonne C&F and US Aid scheme is a good source of American wheat for that country, sources said.

According to one trade estimate, India did export a small quantity of 58,000 tonnes to that country in one-to-one private deals last year but could not participate in the government floated tenders due to Karnal-bunt related issue.

Whatever little wheat is procured from Karnal-bunt free regions gets sold out under FCI's Open Market Sales Scheme with a number of multinationals using it for their branded flour sold within the country.

Wheat varieties like MP's 'durum' fetch a premium in the domestic market and to sell them within the country is a profitable proposition rather than making forays abroad.

Indian wheat harvested last year is selling at around $115 a tonne and the old crops at $112 a tonne, while domestic prices translate into over $145 a tonne.

Yet, India is in the world wheat trade because government is selling it to traders at pre-determined ex-granary prices much lower than the market rates.

Offtake of wheat from FCI godowns for export purpose in the April-January 2002-03 period was 4.2 million tonnes. FCI is selling wheat to exporters at Rs 4810 per tonne for year 2000 crop and non-lustre lost crop of 2001. The rate is Rs 4950 per tonne for new crop harvested in 2002. Crops of 1998 and 1999 are available at Rs 4,300 a tonne. Lustre-lost wheat of 2001 is deemed as exhausted.