By Mayank Bhardwaj
NEW DELHI, June 14 (Reuters) - The Indian government appears
likely to offer 3 million tonnes of wheat to commercial biscuit
makers and flour mills and another 10 million tonnes at cheap
prices to the poor before its huge stockpiles start to rot.
A ministers' meeting to decide on offering wheat to
businesses, including biscuit maker Britannia Industries
, and to state governments for distribution was
scheduled for late Thursday but then called off for procedural
Ministers will soon meet again, government sources said.
India, the world's second-biggest rice and wheat producer,
is grappling with storage problems due to bumper harvests in
Grain stocks at government warehouses were at a record 82.4
million tonnes on June 1 against 63.0 million tonnes of storage
space, forcing authorities to store grains in the open.
Officials concede that 6 million tonnes of grains could rot
due to lack of storage space, but analysts say the losses could
be higher as more than 19 million tonnes lie in the open.
But the response by local buyers to any offer is likely to
be tepid because of pricing.
"There is no reason to be enthusiastic. The reaction of both
- bulk buyers and state governments - will be pretty lukewarm
again," said Veena Sharma, secretary of the Roller Flour Millers
Federation of India.
"The cost at which the government tries to offload stocks
deters buyers. Flour millers or food companies find it easier
and economical to buy from the open market, while state
governments do not lift as it will strain their resources," she
The government will not sell below the price it paid for the
wheat, which was 12,850 rupees per tonne in 2012. That equates
to about $230 per tonne, not including freight and storage
costs. Wheat can currently be bought on the global market for
about $250 per tonne.
Sharma said procedural delays also encourage bulk consumers
to buy from the market instead of from government stocks.
In 2011/12, the government managed to sell only about 1
million tonnes of wheat to bulk buyers after offering more.
Any extra allocation to states for subsidised sale to the
poor will be in addition to 55 million tonnes of grain already
earmarked under the food welfare programme for the fiscal year
from April 1, 2012.
The government is also likely to allow exports from
government warehouses and decide on incentives for overseas
sales to try to bring down the stockpiles.
(Editing by Jo Winterbottom and Jane Baird)