The earlier proposal to remove the import duty on wheat flour seems to be a move to pressurise such domestic players to release their stocks. Clarifying the Government’s position on wheat flour imports, Nandkumar said, “We were considering removal of the 37 per cent import duty on wheat flour since it did not make sense to have it while wheat has a zero import duty.”

But this proposal is currently in “cold storage”, he added. “The move was aimed at enabling private players to import wheat flour as it was felt that some south Indian millers were trying to push up the market prices,” he said. “The Government, however, has no plans to import and distribute wheat flour on its account,” he said, citing lack of handling and storage capacity for wheat flour.

Millers, however, claim that they are holding stocks only to meet their existing contractual commitments, as there may be no open sale of wheat by Food Corporation of India (FCI) during the lean season this year. “The food secretary has obtained written stock declarations from all millers who are holding more than 50,000 tonnes and, hence, there is no possibility of hoarding without the Government’s knowledge,” said Roller Flour Millers’ Federation of India president Datta Raj.

According to millers and traders, given the already falling prices of wheat and holding costs such as interest rates, warehousing charges and shrinkage, the industry has no reason to be holding back stocks. “In the benchmark Delhi market, prices are now approximately Rs 950 (Rs 989 for the week ending October 8). We purchased the wheat more than three months ago over and above the Government’s minimum support price (MSP) and bonus of Rs 850 (sometimes as high as Rs 900). You add the costs and we have little to benefit now,” contends a trader.

On the issue of floating domestic tenders for the procurement of wheat rather than importing it, Nandkumar said, “There have been demands for local procurement of wheat rather than imports. Local procurement would push up domestic prices, which would benefit only the traders who are now holding stocks. No farmer has wheat stocks now, at a time when the wheat harvest season is long gone and rice has started coming to the mandis.”

“Why should we let the traders benefit rather than the farmer?” he asked.

Tug of wheat

• Millers say Govt has taken declarations from those holding more than 50,000 tonnes

• Millers holding stocks to meet existing contractual commitments as there may be no open sale by FCI this year

• Earlier proposal to reduce wheat flour import duty may have been a move to pressurise millers and traders to release stocks, feel observers

• Higher domestic prices will benefit traders rather than farmers, feels food secretary