India, the world's second-biggest wheat producer, is sitting on huge stockpiles of the grain after four consecutive bumper harvests.
Despite overflowing grain bins and good monsoon rains, the government has not moved to lift a ban on exports slapped on in 2007 to overcome a shortage at the time.
How much surplus stock has India?
Wheat stocks in government warehouses rose to 33.58 million tonnes on July 1, nearly double the target of 17.1 million. Farmers harvested 80.71 million tonnes in 2010, beating the previous year's record output of 80.68 million. A government decision to buy wheat from farmers at higher prices also helped swell stocks.
How much wheat does India need?
India needs about 76 million tonnes of wheat annually to feed more than 1 billion people. This includes about 13 million tonnes the government needs to supply to the poor at subsidised rates.
What is India doing with surplus wheat stocks?
It is struggling to store its wheat properly. Some of the grain is stacked in open fields under tarpaulin, raising fears of rot and decay. Government warehouses can store only 42 million tonnes of grains, while current wheat and rice stocks total nearly 60 million tonnes.
Why is India not allowing exports despite huge stocks?
The government faces severe criticism and street protests against inflation. Parliament has been stalled for several days because of vociferous protests against high prices. In this situation, it will face even more criticism and protests if it allows exports of the grain.
The government will prefer to free more wheat from federal stocks in open markets than allow exports now. Latest government data showed the wholesale price inflation, the most widely watched measure of prices, was at 10.55% in June, holding in double digits for the fifth straight month.
When is India likely to decide on exports?
The Indian government will allow exports only after it is convinced that the summer-sown crop is in good shape. The June-September monsoon rains are crucial in determining India's food output. Officials will watch the progress of monsoon rains and assess the moisture level in the soil, which is vital for the next wheat crop that will be sown from October and harvested in the second quarter of 2011.
What issues will influence India's decision on exports?
Any fall in food prices and signs of yet another strong harvest will be the two most crucial triggers for any decision on allowing exports. A key factor in this would be the progress of the monsoon. Rainfall has recovered after a shaky start and is only 5% below average in the June 1-July 28 period.
Are exports by India totally banned?
Private traders are not allowed to export wheat but India has regularly shipped small quantities to neighbouring Bangladesh, and Nepal.
Traders say these shipments are too meagre to influence the market, while the government sees supplies through diplomatic deals as an opportunity to strengthen neighbourly ties. Exporting small quantities also helps create some storage space without the risk of strong criticism if exports are freely allowed.
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