India fighting US, Canadian allegations of subsidised wheat exports

India has now been forced to defend its wheat exports, following complaints by the US and Canada at the World Trade Organisation of subsidised wheat exports by India. The two countries are concerned about the on-going export of 2 million tonnes of wheat by Food Corporation of India might hurt their own wheat exports.

The issue was raised at a recent meeting of the WTO's Committee on Agriculture.

FCI, which is responsible for procuring foodgrains at government-prescribed prices from farmers and distributing it, has also to ensure that the stock is utilised.

The ministries of commerce and agriculture are now working out the actual costs involved in each stage right from when the crop is sent out of the farms up to the point of distribution, the official added.

Commerce ministry officials said the allegations are based on the faulty assumption that the administration cost of procuring and storing wheat in the country is almost half the acquisition price of the foodgrain.

While Canada has alleged that India is lowering the floor prices for wheat exports from $300 per tonne to $260 per tonne, which was less than the price of about $275 per tonne being offered by other exporters in the global market.

The US, on the other had, alleges that India was selling wheat at prices lower than its acquisition cost.

USFDA estimates FCI's acquisition price from farmers at $220 per tonne, which is much lower than the price at which India was exporting wheat. But, according to the US agencies, the price would be more than the export price if a 40 per cent administration costs is added to it.

If the US and Canada are able to prove that India is selling subsidised wheat, the country could be either forced to stop exporting at the existing prices or face penalties.

The issue is an extension of subsidised food procurement by FCI for the country's Food Security Programme, which faced wider criticism by the US and other wheat powers at the WTO meeting in Bali.