Wheat export ban lifted to settle ‘cabinet feud’.

Ending differences between agriculture minister Sharad Pawar and food minister KV Thomas, the cabinet committee on economic affairs (CCEA) headed by prime minister Manmohan Singh did a balancing act, by lifting a four-year-long ban on export of wheat as well as releasing 8 million tonnes in the domestic market. The CCEA approved export of 2 million tonnes of wheat from the central stock.

The two ministers were at loggerheads on the issue. While Pawar advocated export of wheat to clear overflowing godowns, Thomas proposed to sell 30 lakh tonnes of old stock at a concessional rate to private flour mills and provide additional supply to both APL and BPL families. The issue of storage had become so acute that the Uttar Pradesh government decided to stop wheat procurement last month.

Briefing about cabinet decisions, home minister P Chidambaram said the proposal was one of the steps to manage overflowing wheat stocks in the central pool. As a measure to soothe the nerves of food minister, the government also agreed to release additional 5 million tonnes of food grains to BPL families and allowed sale under Open Market Sale Scheme of 3 million tonnes of wheat.

The government’s decision of permitting wheat export may also raise hackles in the United States as the price set for exports (12,400 per ton) is even below this year’s minimum support price (MSP) of Rs 12,850 per tonne. It means subsidising the foreign consumers to the tune of Rs800 crore.

The US had been warning that selling wheat below cost will be in violation of the World Trade Organisation rules. Since India’s export was already in the pipeline, the US had warned the commerce ministry that it cannot sell below the MSP at which it buys from the farmers. The US may move WTO against India.

The actual price of wheat was coming to the tune of Rs 16,500 per tonne. But the cabinet note prepared for the CCEA, pointed out that there would be no buyer at this price, defeating the very purpose of offloading the extra stock from the central pool.

Source : dnaindia.com