labels: economy - general, agriculture
Global wheat shortage forecastnews
03 November 2006

New Delhi: A report by the United States Department of Agriculture has forecast a global wheat shortage in the coming year because production forecasts for several countries that have finished harvesting have been revised downward.

  • The Australian Wheat Board (AWB) has already announced that a severe drought in Australia may cut the country''s wheat output in the current financial year (2006-07) by almost 64 per cent over last year and Australia may be forced to import feed grain to meet its local demand.
  • Ukraine, a major wheat producer has suspended its wheat exports.
  • China''s wheat production has fallen by 1.5-million tonnes to 103.5-million tonnes with small downward revisions in area and yield.
  • The wheat crop in Brazil is also said to have failed.
  • The report warns that despite a small increase in wheat production in Canada, the US and South Africa, global wheat production next year will decline.

This has sent off alarm bells in the government just when two major wheat-producing and consuming states — Punjab and Uttar Pradesh — will face state assembly elections due early next year. This has resulted in the government going on a procurement overdrive.

Finance minister P Chidambaram has warned the agricultural ministry that importing more wheat could cost India considerably more than what it had paid earlier this year.

India is importing 5.5-million tonnes (of which around 2.4-million tonnes had arrived till October 31) at an estimated cost of around Rs4,700 crore. Though the government has increased the minimum support price for wheat to Rs750 a quintal, futures prices have touched Rs1,100 and continue to climb.

Early and large procurement by the Food Corporation of India next March, when the wheat crop is harvested, alone would ensure India did not face a wheat crisis, the sources added. The ball, they said, was now in the agriculture minister''s court.

The government knows a wheat shortage could have major repercussions in the Assembly elections in the wheat-producing states.

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Global wheat shortage forecast