Author: Nidhi Nath Srinivas
Publication: The Economic Times
Date: June 12, 2002
American Trade Hits As 3m Tonnes
of Cheaper Local Grain Floods Asia
HONEY, we've shrunk the market for
US wheat. And Uncle Sam is decidedly upset. The traditional strongholds
of US wheat - Indonesia, Malaysia, Philippines, South Korea, Sri Lanka,
Vietnam, and the Middle East - have been flooded by 3m tonnes of substantially
cheaper Indian wheat over the last 18 months. And their appetite for Indian
wheat continues to grow.
Taken by surprise, Washington now
believes if Indian exports meet even half the target of 10m tonnes of subsidised
wheat in '02-03, it will be a direct blow to US' chances. According to
latest data collected by the US agriculture department, in Bangladesh,
US exports are only half that of the previous year because Indian wheat
has been imported at significant discounts to that of competing suppliers
and captured 40% of the market.
In the Philippines, Indian wheat
has directly reduced short red winter sales as well as hurt sales of soft
white from the Pacific Northwest.
In South Korea, Indian wheat is
competing with US corn for use in animal feed. Indonesia, Sri Lanka and
Malaysia have already together imported 680,000 tonnes of Indian wheat
from July to May. Even Vietnam, though not a major destination for US wheat,
has become a large market for India, importing 300,000 tonnes this year.
"This suggests that Indian wheat will likely be the main beneficiary of
this rapidly expanding market," USDA has said.
In the Middle East, millers are
blending high quality wheat with low quality Indian wheat to produce flour
of acceptable quality more cheaply.
"Sourcing cheap wheat is particularly
important to Middle Eastern importers given the weakness in their currencies.
As a result, Indian exports to UAE, Egypt and some smaller importing countries
have provided additional competition to US exports," the US government
said. The new '02-03 marketing year (April-March) will be equally challenging
for US wheat even though Washington believes New Delhi tends "to be a bit
optimistic and it is highly unlikely that the 10-m-t target will be met."
"Several factors point to increased
Indian exports this year including very large subsidies, continued strong
demand from customers of Indian wheat, exporters purchasing directly from
the market rather than the food agency, and a much better quality crop,"
it has pointed out.
This year's wheat crop is particularly
favourable for export as its protein levels are far higher than previous
years. "This, combined with recently installed cleaners at Indian ports,
should allow more quality conscious buyers to purchase the wheat as evidenced
by a recent Malaysian purchase of 100,000 tonnes and an agreement with
Sri Lanka for the purchase of 300,000 tonnes over one year," the US government
has slated. 'Though export levels will largely depend on the government's
subsidy policy, the above factors, when combined, point to an increase
in Indian exports from 3m tonnes this year to 4m tonnes, further limiting
export opportunities for US wheat," it has concluded.
