BJP alleges wheat import scam, govt issues clarification

New Delhi, July 13 (UNI) Stung by the BJP's smelling of a Rs 1,200 crore scam in the recent contract to import of 5.11 lakh tonne wheat, the government today came out with a lenghthy clarification obliquely accusing the US for manipulating the world prices after India cancelled tenders for wheat purchase on lower rate earlier in May.

In May, India was not prepared to import wheat at 263 dollar a tonne and now it has contracted to buy wheat from international market at 320/336 dollar per tonne.

The government's latest decision came under scan of major opposition party -BJP- which accused Food Minister Sharad Pawar of committing a scam in the deal.

The Food Ministry, in its clarification, has presumed that the USDA report on June 11 which downgraded the world production of wheat to 610 million tonnes led to the increase in the wheat prices in the international market.

The latest decision of the Government to import wheat at a higher price in July, 2007 has been guided by downgrading of the world output by the USDA and sharp rise in the world prices.

The ocean freight also have gone up considerably.

The CBOT futures for September, December, 2007 and March, 2008 have shown a bullish trend, pointing towards higher prices in the international market in the months to come.

Giving the details of official decisions on wheat purchase, the statement said as the Government could procure only about 11.1 million tonnes of wheat in the just ended season, it decided to import 5 million tonnes of wheat from international market to ensure that food security and to provide adequate foodgrains for the Public Distribution System (PDS) and other welfare schemes.

Accordingly, in the coming months, the Government would ask State Trading Corporation (STC) to float tenders for purchase of more wheat from the international market after taking into account the requirement, availability and price trends.

The tender for the first one million tonne was issued in May'07 by STC on behalf of the Government. After negotiations, the STC recommended purchasing of 3.06 lakh tonnes at 263 dollar FOB. On examining the recommendation, the Government decided to reject the tender expecting getting of lower prices after the harvest in major wheat producing countries in July/August and November/December this year.

The Australian crop to be harvested during November/December, 2007, which is reported to be good as per IGC Report, may also have a softening effect on the wheat prices. Also, the IGC report in May-end showed declining price trend in the International Market with an estimate of 623 million tonnes of wheat output (against 539 million tonnes last year).

The wheat futures also closed with the spot July prices falling to a one month low on improved crop conditions rating for the US winter and spring wheat.

Against this background, the government decided to reject the tender on May 29 as CBOT futures were in the range of 170 - 180 dollar with no indications towards any spurt in the near future.

Besides, the domestic price of procured wheat was lower than the prices of imported wheat, which worked out to Rs. 1103 per quintal.

And about nine lakh tonne more wheat was procured thereafter.

The government thought that the difference could lead to ''hoarding of wheat stocks by farmers and traders in the hope of future price rise, thereby affecting the wheat procurement.'' UNI