India's support programme for wheat growers was attacked for
"negatively affecting" the world market amid an increasing focus on the country's
growth as a producer, with a record 100m-tonne harvest in its sights.
US Wheat Associates, which promotes US sales of the grain, warned
that "poor government policies" were behind a rise in India's status as a wheat
producer, and exporter, which has prompted official forecasts of the country
achieving its first 100m-tonne harvest this year.
India, which offers its farmers a minimum of 13,500 rupees ($215)
per tonne, has "consistently ignored" promises made to the World Trade
Organization over subsidising exports, US Wheat Associated president Alan Tracy
Given transport costs of some $80 a tonne for getting wheat
from India's interior to port, sales prices of $279.52-283.60 a tonne at a
tender which closed on January 14 imply shipments are indeed being financially
"Considering the cost to get wheat to ports, clearly the
puppeteers in India's government have pulled the wrong strings and cannot
compete in world wheat trade without paying significant export subsidies," Mr
He added that, "with most of India's storage capacity already full of an
estimated 20.0m tonnes in carryover stocks, it is not surprising that India is
aggressively promoting exports".
The muffling of market forces, and with officials forecast a
100m-tonne harvest this year, means India's dynamics represent an issue for the
"There can be no doubt that [India's] erratic and sometimes
contradictory price support and export policies are spilling out of its borders
and negatively affecting world wheat trade," Mr Tracy said, urging a greater
focus on underlying dynamics.
"Policies that reflect the true nature of the world market
would better serve wheat farmers and their customers."
The dramatic growth in India's status as a wheat shipper, with
its exports soaring to 6.82m tonnes in 2013-14 from 72,000 tonnes two years
before, has attracted the attention of Canada's government too, which has
requested that the issue is taken up by the WTO.
It has tabled questions to a meeting of the WTO agriculture
committee on Wednesday over India's exports, noting that India's government has
lowered the floor price for exporting surplus stocks from state reserves to
$260 a tonne from $300 a tonne.
This is "lower than the price of the same quality wheat from
Canada (and other countries) sold in the range of $270-275 per tonne", Canada
said in its representation flagging, as a wheat exporting country itself, a "commercial
interest" in India's policy.
"Could India elaborate as to the volume of wheat stocks held
by the Food Corporation of India? How does India determine the floor price for
wheat exports?" Canada asked.
The WTO has granted India, and some other developing
countries, a reprieve against legal action of breaching farm subsidy limits, as
part of a deal struck at a WTO Ministerial meeting in Bali last month.