The Central government is in a piquant situation now as far as wheat import is concerned. The government wants the bidders for the 1 million tonne wheat import contract to reduce their prices for the bid.

However, not a single company, which submitted bids for the tender, has agreed to the demand.

Firms, including Toepfer International, Cargill Inc, Concordia Agritech and Glencore AG, offered a total of 9,20,000 tonne of wheat at between $320-$360 a tonne earlier this week. The government is reluctant to buy wheat at that rate.

India paid an average $230 per tonne for imports in 2006, when it was forced to tap global markets for 5.5 million tonne. In May, it scrapped a tender for one million tonne as the average price of $263 per tonne was perceived to be high.

But in June, wheat on the Chicago Board of Trade rose to 11-year highs and traders expect little respite with world wheat stocks seen falling to a 30-year low due to erratic weather in the US and drought in Russia and Ukraine. Between May and June, the price of wheat futures on the Chicago Board of Trade has moved up to $5.7150 a bushel from $5.1075, a 12 per cent jump. On 1 million tonnes, the difference works out to be $22 million.

So, the country will have to pay a heavy price for rejecting that bid in May.

It is expected that the food ministry will now take a call. India, which consumes around 72 million tonne of wheat annually, is likely to produce more than 73 million tonne in 2007, up from 69.48 million tonne last year.

In October 2005, India's buffer stocks had dipped below 10 million tonnes, the first time in a decade that it fell below the level that's considered safe. Yet, it was only in February 2006 that India first decided to import wheat. In those four months, prices rose 17 per cent in Chicago.