SENSEX NIFTY
Jun 08, 2012, 08.06 AM IST | Source: Reuters

India's grains stocks at record high, exposed to rot

India's wheat stocks at government warehouses surged to a record 50.2 million tonnes on June 1, well above the official target of 4.0 million tonnes for the quarter ending June 30, government sources said on Thursday.

India's grains stocks at record high, exposed to rot

India's wheat stocks at government warehouses surged to a record 50.2 million tonnes on June 1, well above the official target of 4.0 million tonnes for the quarter ending June 30, government sources said on Thursday.

Rice inventory for the same period was 32.1 million tonnes against a target of 12.2 million tonnes. The government has an extra 3 million tonnes of wheat and 2 million tonnes of rice as strategic reserves over and above the monthly stocks.

Much of the grains are left out in the open exposed to potential rot as state-run warehouses can store only 63 million tonnes against the total 82.4 million tonnes of current stocks, which includes some coarse grains such as millets.

The government aims to add up to 4 million tonnes of storage capacity by the end of June, one government source has said, still leaving a gap of 8 million tonnes.

The government's storage problem has worsened as farmers have just finished harvesting a record crop, forecast to be 90.23 million tonnes in 2012. Demand runs at about 76 million tonnes a year.

A sharp rise in the price the government pays to buy wheat from local farmers has led to bin-bursting harvests since 2007, exacerbating storage problems in the world's second-biggest wheat producer.

The government has raised the price it pays to buy wheat by more than 70 percent since 2007.

Overflowing grain bins forced India to lift a four-year old ban on exports in September but lower global prices scuppered efforts to trim bulging stocks, forcing the government to store wheat under tarpaulin and exposing the grain to rot and decay.

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