India Farm Minister Wants to Increase Exports

India Farm Minister Wants to Increase Exports

India's farm minister, Sharad Pawar, said Tuesday that he strongly favors exports of sugar, wheat, rice and cotton as the country has surplus stocks and is likely heading to another year of a bumper output.

"I honestly feel, in the larger interest of the country's farming community, there should be an open policy for export and import of agriculture commodities," Mr. Pawar said in an interview.

India's foodgrain stocks are at an all-time high of 65.47 million metric tons, about two-and-a-half times more than the annual requirement for state welfare programs. Still, the government is cautious on exports because it fears worsening already high inflation and it plans to enact a law that seeks to expand the supply of subsidized grains.

The country is also facing a shortage of storage facilities, with its warehouses already full. Production of farm commodities like sugar, wheat and cotton is expected to exceed local requirements, weakening their local prices as only limited or no exports are allowed.

Mr. Pawar said the time is right to immediately allow exports of 1.0 million-1.5 million tons of sugar as global prices have surged due to concerns over the crop in Brazil, the largest producer of the sweetener.

London's benchmark August white sugar contract has risen 20% in one month to around $720 a ton on concerns over the size of Brazil's crop due to aging plants and dry weather, and a surge in demand ahead of the Ramadan holiday. At the same time, the price in India has fallen 6.3% to 25,300 rupees per ton ($566).

In April, the government allowed exports of 500,000 tons of sugar. Mills have already almost exhausted the quota and want clearance to ship another 1.5 million tons in the marketing year through September.

Top sugar industry executives are meeting in Mumbai later Tuesday to discuss the demand for more exports, particularly as monsoon rains are posing a threat to stocks stored in the open.

"My ministry is going to strongly support [more sugar exports]," Mr. Pawar said.

The minister said sugarcane acreage and output in the next marketing year are expected to rise at least 10% as higher local prices earlier in the year have tempted farmers to increase plantings.

India, the world's second-biggest sugar producer, is forecast to produce 24.5 million tons of sugar this year, exceeding its annual requirement of 22.0 million-22.5 million tons.

On cotton, Mr. Pawar said the acreage is expected to jump 40% next year starting July 1, and so the government can consider more exports.

Also, genetically modified verities are now increasingly used, he said. "Therefore, productivity will be higher."

Last week, India allowed exports of 1.0 million more bales of the fiber in 2010-11 as traders have already shipped the 5.5 million bales that had earlier got export clearance.

Each bale of cotton weighs 170 kilograms.

The government is expected to review the export cap again after a month to a month-and-a-half, once a better picture of the new season's crop emerges.

Mr. Pawar said the government has yet to make a decision on exports of wheat and rice because it is weighing the needs of the government's food security law that will supply cheap grains to 90% of the rural population and half of urban dwellers.

Although India's foodgrain stocks are high, the minister said the government will need to plan for bigger reserves to ensure that it is able to supply what it promises under the new law.

Source : online.wsj.com