India forced to resume imports of food grains from US
After nearly four proud years of food-grain self-sufficiency, India is shopping for US wheat to replenish its rapidly dwindling cereal buffer stocks. The Indian move to purchase 2 million tons of American wheat has been shrouded in official secrecy, a measure of the extreme political sensitivity surrounding resumption of food-grain imports here.
India has not had to import food grains since 1977 -- a point of intense national pride for a country long dependent on international grain purchases and donations.
It was therefore something of a bomb- shell when a leading English-language daily, the Times of India, disclosed this week that a key agriculture official was in Washington negotiating the purchase. The Agriculture Ministry declined to comment. But the Indian bid for soft white and winter red wheat varieties was confirmed here by a Western official involved in monitoring India's agricultural production and trade.
The official said India had been considering an overseas wheat purchase for six months, but had kept it secret for "political" reasons.
"The main reason is that India has been proud of the fact that it has become self-sufficient in grains. To go back to the market- place after 3 1/2 years sticks in the craw," he said.
THe Indian Agriculture Ministry had proclaimed as recently as May that it would not buy overseas wheat despite a dwindling of government-held food-grain stocks to what experts considered dangerously low levels.
At the same time, government efforts to buy up 9.5 million tons of the spring wheat harvest were meeting stiff resistance in the northern Indian wheat-growing belt. With government buyers offering private farmers official prices well under the open market rates, the government is unlikely to get much more than 6. 5 million tons for its storehouses.
Government grain reserves of wheat and rice are considered critical to tide the country over periods of drought and crop failures. Thanks to reserves of 21 million tons in 1979, for example, India survived a failed monsoon and resulting crop disasters without a famine -- and without having to resort to outside grain purchases.
In normal years the government gradually reduces its stocks by releasing wheat to flour mills and to urban ration shops, where poor and middle-income consumers buy the grain at subsidized prices. Then, when the spring and fall harvests come in, it replenishes its reserves by buying directly from farmers at official prices.
The bulk of India's wheat never enters the government system; it is kept for home consumption by farm families or bought by private traders for sale in the open market.
Thanks to heavy demand, a holdover of the 1979-80 drought, the government's wheat reserve was down to a perilous 2.6 million tons -- about half the desirable level -- in April. With the failure of its spring harvest procurement drive, the government reportedly had little alternative but to seek the needed wheat overseas.
This year's monsoon rains, which determine the fate of fall and winter crops, are off to a quirky start, and Western agricultural observers estimate India may have to double the size of its 2 million-ton import order if the monsoons fail.
"They're buying at a good time," notes an agricultural expert. "It's more than likely that the Soviets and the Chinese will come on the market before the end of the year and that will send the prices up." Current estimates are that India will buy 1 million tons of soft white wheat at $150 a ton and 1 million of red wheat at $169 a ton.