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India's wheat production to fall 13 mn tonnes short of estimates: Assocham

18 March 2016

Unseasonal rains and hailstorms could dent wheat production in India this year, resulting in a shortfall of around 13 million tonnes from earlier estimates of around 94 million tonnes, forcing imports of the commodity, says industry association Assocham.

The initial estimates of wheat production were put at 93.8 million tonnes in the current crop year, but a shortfall may force the government to consider import of the staple grain, the Associated Chamber of Commerce and Industry (Assocham) said in a paper.

''The shortfall in production may lead to a spike in food inflation, which may then contribute to the spiral of price rise, which has been tamed after a prolonged gap,'' said D S Rawat, secretary-general of Assocham.

According to current estimates, this year's wheat production may drop to 79-80 million tonnes compared to government estimates at around 93.8 million tonnes, which is unlikely to be achieved under present weather conditions that continues to threaten maturing crop, adds the paper.

"The emerging wheat situation in the country is alarming in view of the expected lower crop, depleting stocks and the erratic weather threatening crop further towards maturity," the paper says.

The weather disturbances in March 2016 pose a serious threat to standing crop and the quality of wheat and its texture. If the wheat quality is impacted, government might end up with procurement of lower quality wheat while the availability of quality cereal in the open market would also be affected, said Rawat.

Also, with only around 13.37 million tonnes of wheat stocks left with the government as of April 1,2016, a drop of 10-20 per cent in wheat procurement in the current year will result in around 35-36 million tonnes of wheat stocks as of 1 July 2016.

Given an average monthly requirement of 3 to 3.5 million tonnes for the public distribution system (PDS) and open market wheat sales, wheat stocks would plummet well below 10 million tonnes as of 1 April 2017, forcing the government to consider imports to augment domestic shortage/buffer requirements, Assocham adds.

Assocham now wants the government to reduce wheat import duty to a more reasonable level of 5 to 10 per cent so that parallel imports by private trade would ease pressure on government stocks and prices due to better open market availability.

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