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FOREIGN COUNTRIES' POLICIES AND PROGRAMS
Global Wheat Export Sales Not Lagging, Contrary To Popular Perceptions
Contrary to popular perceptions, wheat export sales
are not lagging and import demand is not sluggish when compared
to last year. Export sales from the United States and European
Union (EU) are about the same while exports for the other major
suppliers (Argentina, Australia and Canada) are nearly fifty
percent ahead of last year. The notion that demand is sluggish
seems to be based on a perceived "slow" U.S. export
sales pace and the absence of the Former Soviet Union (FSU) and
China vying for large quantities from multiple sources, for
extended delivery periods. The reality is that many importers are
buying more wheat, but in smaller lots, more frequently
and on a more regular basis. In fact, imports from countries
other than the FSU and China are growing by an average of 1.6 MMT
per year.
In past years, global buying patterns were influenced b
y
the fear that the FSU and China would suddenly start purchasing
huge quantities of wheat and drive up prices; just the mere
expectation that one or the other would enter the market often
caused prices to jump. Now that those large, erratic buyers are
virtually out of the market, importers are purchasing only what
they need whenever they need it, because they are less concerned
with the threat of sharp price surges.
Importers have also altered their buying patterns in response
to the "double whammy" of high prices and reduced
subsidies. Strong, world-wide, wheat demand and the sharp erosion
in global stocks, particularly those held by major exporters,
boosted prices to record highs by early 1996. Prices have since
dropped, but still remain some 50% higher for the many buyers who
benefitted from exporters' subsidies just a few years ago. With
the cessation of the "subsidy war" between the United
States and European Union, many countries are now exposed to the
reality of sharply higher, less-subsidized market prices, and
have consequently modified their buying patterns. 
The world-wide trend toward privatization of the grain
industry, as exemplified by countries such as Egypt and Morocco,
has also caused importers to change buying habits. Mills in these
countries are less able to afford large purchases than their
government-owned predecessors, and are consequently buying the
same amount, or more, in smaller lots on a more orderly schedule.
The notion of lagging export sales seems to be
fueled
seems to be fueled by the perception of "slow" early-season U.S. export sales, relative to last year, but that is not a valid basis for comparing export sales progress. Market psychology seems to be stuck on this year's smaller, early-season export sales position relative to last year, which was unusually high. However, what many perhaps do not realize, is that a stronger 1997/98 weekly sales pace has now more than offset that slow start.
Furthermore, perceptions seem to be based on the need for an
even stronger export sales pace to reach USDA's current U.S.
export estimate. Whereas U.S. export sales so far are only
slightly ahead of last year, the current export estimate is 8%
higher than last year's actual export level (29.3 MMT vs 27.2
MMT). Thus, market psychology also seems to be stuck on the
absence of a stronger export sales pace which presumably should
be necessary to reach that higher export estimate. In point of
fact, last year's early-season pace was well above 
average
relative to the final export level, but it dropped off in the
second half of the marketing year when record crops by southern
hemisphere exporters entered the market. This year, wheat crops
in Australia and Argentina are returning to more normal levels,
and we would expect the U.S. export sales pace to strengthen in
the second half of the marketing year. For further information
please contact Richard Battaglia on (202) 720-1135.
Turkey Retreats on Grain Market Liberalization
Contrary to developments in many countries around the world, Turkey has increased its intervention in the grain sector during the past two years. Support given to grain growers has risen, with higher producer prices, subsidized inputs, and the imposition of heavy import duties. This policy has helped fuel a troublesome inflation and budget deficits. The recent decision of the European Union (EU) to refuse Turkey's membership application further complicates the country's situation. With its population of over 60 million, Turkey is larger than any of its European neighbors, save Germany. Its location and predominance of Islam give it a strategic position as a bridge to the Middle East and parts of western Asia. As both an importer and exporter of grain and grain products, Turkey plays a significant role in the international cereals sector.
Economic Overview:
While Turkey enjoyed another year of rapid economic growth in 1996, the country continues to suffer under the related problems of large budget deficits and chronic high inflation. Following an economic downturn in 1994, a stabilization program was put in place. Although the program had some initial beneficial impact, it has made little headway in addressing deep-seeded structural problems facing the economy. For example, the 1997 national budget targeted an inflation rate of 57.5 percent, but it is now projected at 100 percent. Privatization is moving slowly, and there is little prospect of restraining demand pressures, given the strong economic growth that Turkey has been experiencing. The real GNP increased by 8.1 percent in 1995 and 7.9 percent in 1996. Fiscal policies have been expansionary, as public consumption rose by 10.5 percent in 1996, and public investment rose by one-fifth. Private investment also has been strong, reflecting the efforts of Turkish industry to gear up for the opportunities afforded by closer trade ties with the European Union (EU). Turkey entered a customs union with the EU on January 1, 1997. Although the customs union excludes agriculture (except processed products), there had been talks regarding liberalization of trade in farm products. However given the recent rejection of Turkey's application to the EU, it is difficult to predict if Turkey will continue these talks.
Selected Economic Data (1996):
Area: 780,580 sq. km. (slightly larger than Texas)
Land use: arable land (30%), permanent crops (4%), meadows and pastures (12%), forest and woodland (26%), other (28%).
Major agricultural products: tobacco, cotton, grain, olives, sugar beets, pulses, fruit and nuts
Total agricultural imports (million $US): 2,887
Major agricultural imports: livestock, hides and skins, wheat, seeds, tobacco
Total agricultural exports (million $US): 2,704
Major agricultural exports: hazelnuts, vegetable oil, tobacco, livestock
Population (million): 62.5
Population growth rate (percent): 1.67
Real GNP (billion $US): 184
Real GNP growth rate (percent): 7.9
GNP per capita ($US): 2,928
Inflation (CPI, percent): 80
Agriculture as:
% of imports: 5.8
% of exports: 11.7
% of GDP: 14.4
% of workforce: 35
Agricultural Support Policies
In the early 1990's the Turkish government, in keeping with the broader objective of privatization, gradually diminished its role in agricultural markets, particularly in price supports. However, this trend was reversed more recently, when the government again began to implement market control though procurement of agricultural commodities and supporting agricultural prices. The GOT also supports farmers by subsidizing major inputs, particularly credit, fertilizer and irrigation water. The Turkish Agricultural Bank provides agricultural production loans at rates half of the prevailing commercial rate.
Observers attribute the apparent change in agricultural support policy to political volatility in Turkey. Turkey has seen four coalition governments in the last two years, each apparently more intent than the last to win the support of farmers through lavish price support polices combined with protectionist actions aimed at reducing imports.
The most important and readily apparent example of the return to government intervention in the agriculture sector can be found with the Turkish Grain Board (TMO). After procuring substantial quantities of grain in 1996, TMO purchased even larger quantities in 1997--3.5 million tons of wheat and 1.8 million tons of barley so far in 1997/98. The TMO has paid nearly $1 billion to the farmers for the procurement of this 5.3 million tons of grain.
The current coalition government is headed by the ANAP party which has identified the reduction of inflation in Turkey as its central goal. Economic leaders of the new coalition appear to be acutely aware that current government policies fuel inflation by (1) increasing government deficits and (2) increasing the cost of agricultural commodities for consumers. However, given the likelihood of yet more elections in 1998, the prospect of yet another year of heavy government intervention in agricultural markets seems probable.
Until recently, the state-controlled Agricultural Sales Cooperative Unions paid the government support price for products purchased. This practice served to protect farmers' incomes from falling prices during periods of excess production. Wheat, corn and barley are procured exclusively by the government. As a result of unrealistically high support prices, stocks began to accumulate. The economic burden of maintaining these programs became so severe that recent governments have found the programs difficult to continue. Currently, government price supports exist only for cereals, sugar beets and tobacco.
Export subsidies offered by the GOT change frequently and are very difficult to quantify. Total subsidy payments are not available. Indirect export subsidies for grains have at one time or another also been used, but not during 1996/97.
Commodity Highlights:
Wheat
Production: Wheat is Turkey's largest crop. Production during 1997/98 is estimated at 16.0 million tons, a good sized crop, and the same as last year. Wheat production has not fluctuated much in the last decade, and a slight decline in acreage has been offset by rising yields. About 40 percent of the crop is grown in central Anatolia and the remainder of production is evenly distributed throughout the rest of the country. Area and production estimates are difficult to make due to the lack of systematic crop surveys. Bread wheat is the main crop, but some durum is also produced. Of the 3.5 million tons of wheat procured by the TMO during 1997/98, 2.5 million tons were milling wheat, 750,000 tons durum, and 250,000 tons feed wheat. This wheat was reportedly purchased at relatively high prices, and the TMO likely will incur substantial losses as it resells this wheat. Although the quantity of exports is unknown, it is predicted that the TMO will try to export most of the milling quality wheat purchased. However, this will be difficult because the TMO will have to sell the wheat at approximately 50 percent of the purchase price. The TMO is likely to have more success in selling durum and barley. It conducts its export sales of grains through issuance of tenders.
Consumption: The per capita consumption of wheat in Turkey is one of the highest in the world, averaging approximately 260 kg. Total domestic wheat consumption for food has averaged around 13 million tons, roughly divided as follows: 85 percent for bread; 7 percent for pasta; 4 percent for cookies and bakery products; and 4 percent for bulgur.
Bread consumption is increasing at the same pace as population growth (approximately 2 percent), while pasta consumption is growing slightly faster. The Turkish milling industry is consolidating and becoming increasingly sophisticated in order to meet the changing demands of the domestic market and compete effectively in world export markets.
Trade: During the past year, tariffs on milling wheat imports have increased from 3 percent to 45 percent. Mainly because of this high tariff, and its positive impact on local production, wheat imports are expected to decline by almost 35 percent during 1997/98 to around 1.5 million tons. The United Stated had the largest market share in 1995 (the latest year with official data) with 24 percent; lesser amounts were imported that year from Romania, Bulgaria, Hungary and Germany. Import demand is driven by the increasingly modern flour milling industry's need to compete effectively in both export and domestic markets.
Due to problems with the domestic wheat sector, millers find it increasingly advantageous to import high quality and more consistent wheat to blend with the locally produced wheat. The Turkish wheat sector suffers from declining quality and the lack of domestic marketing infrastructures, including the lack of a grading system and futures trading. Due to these problems, Turkey is expected to remain a significant wheat importer for the foreseeable future.
Because of quality problems, Turkey has exported virtually no wheat during the past several years. However, it has emerged as the world's second largest flour exporter, with large exports of flour, pasta and baked goods to the Middle East. Turkey is also capturing a growing share of the Central Asian market. Turkish flour exporters benefit from a drawback system under which imported wheat reexported as flour is exempt from import duties. However, with the recent elimination of the US$ 35 per ton export subsidy, it is uncertain whether Turkey will be able to maintain current levels of exports and growth. Turkish millers have complained that the elimination of this export subsidy makes it more difficult to compete against the subsidized EU exports.
Along with the initial increase in import duties in 1996/97, there was the sudden strict enforcement of Turkey's zero tolerance phytosanitary regulations for a number of common grain fungi and toxin. This change in policy was viewed as an attempt to limit imports and encourage consumption of Turkey's 1996/1997 bumper crop. The strict enforce of phytosanitary regulations disrupted trade for several months during 1996. In the summer of 1997, the Government of Turkey again raised import tariffs. Turkey has since temporarily modified its regulations, but has not reduced its import duties. Earlier in the year, Turkey was in the process of a full regulatory review in order to conform to EU standards. However, with Turkey's denial from EU membership, it is uncertain whether the GOT will continue to pursue the adoption of EU standards.
Barley
Production : After wheat, Barley is the next most important grain produced in Turkey. It is used mainly for animal feed. Only 12 percent of production is for food, seed, and industrial use (mainly malting). Similar to wheat, barley is produced in every region of the country. For 1997/98 barley production is forecast at 7.2 million tons, or the same as the previous year.
Consumption: Feed use of barley has trended upwards during the past five years, and is estimated at 5.9 million tons for 1997/98. A further rise in barley consumption is expected to result from a large livestock development project scheduled to begin this year. Large and efficient private sector dairy, beef, and poultry operations are expected to continue expanding the coming years. These increases are spawned by the GOT's generally protective import policy toward these products and an increased demand for meat and dairy products by an increasingly affluent population. However, operations are expected to use more compound feed formulas that include increased corn and higher protein rations.
Trade: Barley imports have been minimal in the past several years, averaging less than 50,000 tons. Exports have been more extensive, and are expected to reach 800,000 tons in 1997/98.
The TMO is anxious to increase its exports of barley in order to earn needed cash and reduce high storage costs resulting from heavy procurement and carryover from two successive, good crops. Since the Turkish Grain Board procures barley at prices well above prevailing world price levels, each ton it resells for export carries an implicit export subsidy. The subsidy level for last year's sales was estimated at USD 45/MT, excluding transportation, storage and transaction costs. In June 1997, the GOT increased the import duty for barley from 15 to 20 percent.
Corn
Approximately 70 percent of the crop is sold commercially and the remainder is for on-farm feeding. Corn area and production are expected to increase over the next several years in response to increased demands, although 2.0 million tons is generally considered the upper limit for commercial production.
Consumption: Corn consumption as feed in Turkey is expected to increase steadily due to strong growth in the poultry industry along with by rapid development in the dairy and beef sectors. The poultry industry, which consumes about 1.3 million tons annually, accounts for just over half the current feed use of corn, and is growing at the rate of 10 percent per year. In addition, demand for both corn starch and high fructose corn syrup (HFCS) is expected to continue increasing.
Trade: The forecast for 1997/98 corn imports is 600,000 tons, a 30 percent decrease from last year. For CY 1995, the latest year for which trade data is available, the U.S. market share was slightly above 75 percent, with Romania and Argentina supplying most of the remainder.
As a result of increased demand for corn for feed and industrial processing, imports are expected to increase steadily for the foreseeable future and the U.S. is well-positioned to meet this growing demand. The GSM-102 credit guarantee program, technical assistance through cooperators, and the Emerging Markets Program are important marketing tools for U.S. corn exports.
In June 1997, the GOT increased import duties on corn and sorghum from 15 to 35 percent and 3 to 35 percent, respectively, a move widely seen as an attempt to limit imports. Corn trade was only minimally disrupted last year by the confusion over Turkey's new phytosanitary regulations.
Rice
Production: Turkish rice production is concentrated in Thrace, the European portion of Turkey and the Marmara region. Four main varieties are grown--Baldo, Rocca, Ribe, and Krasna. Baldo comprises approximately 25 percent of production and is grown mainly in Thrace. Rocca and Ribe are medium grain varieties that make up approximately 60 percent of rice production in Turkey. These varieties are grown in Thrace and the Marmara region. The remaining 15 percent of production in the Krasna variety which is a short (round) grain variety introduced from Russia.
Following previous year's sharp increase and current concerns over dry weather in Thrace, the 1997/98 rice production area is forecast to remain constant at 90,000 hectares. Production is forecasted increase to 446,000 tons for rough rice (290,000 tons for milled rice). Experts believe both area and yield will increase 3 to 5 percent annually due to expansion and improvements in the irrigation infrastructure, especially in Thrace.
The TMO has become more active in the rice market, especially in the past year. Although the TMO procures less than 10 percent of production, it maintains tremendous influence on paddy prices.
Consumption: Although rice is a popular dish, the per capita consumption is relatively low, around 7 kilograms. This low per capita consumption is due to its relatively high price compared to bread and other available substitutes such as pasta and pulses. Consumption is forecasted to increase approximately 5 percent or double the rate of population growth.
Trade: Turkey is expected to be a long-term growth market for rice given the current low level of per capita consumption and the expected income growth. In 1997/98, Turkey is forecasted to import approximately 250,000 tons of rice with the majority of the imports from the United States. Lesser amounts are expected to be purchased from Egypt, Australia, and the former Soviet Union. U.S. imports are expected to increase due to increased price competitiveness. U.S. Calrose retails at a 22 percent discount to the domestically grown Baldo. U.S. Kansas sells at a 10 percent discount to U.S. Calrose, while Egyptian rice sells at a 5 percent discount. Although Egyptian rice is fairly well accepted and well-positioned, the unreliability of Egyptian supply will hamper its growth in the market.
The GOT imposes import duties of 35 percent for milled rice and 27 percent for rough rice. Additionally, in October of 1997, the Government of Turkey banned the import of rough rice due to the discovery of the nematode "aphelenchoides besseyi" in the Turkish rice crop. This restriction does not apply to milled rice. The Turkish Ministry of Agriculture has indicated that they will allow imports of U.S. rough rice accompanied with a USDA certificate indicating that the shipment is free from the nematode. Fumigation will not be accepted as a means of declaring the rice free from the nematode.
Based on reports from the Agricultural Affairs Office, American Embassy, Ankara. For further information, please contact Chin-Zen Lin Plotner no (202) 720-6233.
Argentina Making Strides in Grain Sector
Argentina's grain marketing system has undergone fundamental changes over the last few years. Through infrastructure improvements, its ability to store and transport expanded grain production at competitive rates has made remarkable strides. Further, Argentine agriculture has become more tightly integrated into world markets and plays a more prominent role in the development of world commodity prices. Some of this change comes about as part of the privatization program and other economic reforms which have transpired over the last ten years in the Argentine economy. Also, there has been the realization by the agricultural sector that improved linkages to world markets would be critical, given both the high percentage of Argentine agricultural products that enter into export channels and the role that agricultural export earnings play in the country's economic health.
However, much remains to be done. Knowledge of grain marketing technics at the producer level remains underdeveloped, as still a relatively small percentage of farmers takes advantage of basic marketing mechanisms such as futures markets, puts and calls, warehouse receipts, or "warrants". Further, lack of basic, timely information on market developments also restricts the farmer's ability to efficiently sell their output. At the national level, markets themselves contain some outmoded ideas, including price setting via committee. Recognizing this, the government, marketing institutions, and private consultants are working diligently to transform the system by both providing education and promoting reform, and thereby improve marketing in step with the notable advances in productive agriculture itself.
Key Players
Government:
The Argentine government does not have a direct role in the marketing of grains or oilseeds. But, in order to promote the smooth flow of grain at predictable prices from Argentina, the Secretariat of Agriculture has been actively promoting the use of marketing tools such as futures and options. They have also recently mandated changes in the merchandising system to promote transparent development of prices and improve market liquidity.
Two recent changes are indicative. First, the requirement to pay taxes on profits earned by foreign firms operating in the local futures market was eliminated. By reducing this financial burden (the tax was 27 percent), participation in the local market by firms based in other countries is expected to increase dramatically, with traders from Brazil expected to take the lead, given the large grain imports from Argentina made by that country. Already, Brazilian firms have expressed interest in operating locally, and government officials and local trade experts have provided educational seminars for them. Second, trading of "to be fixed"contracts was suspended for sunflower-seed due to a perceived imbalance in negotiating power between buyers and sellers, and efforts are now underway to develop and implement a more transparent and efficient system /(possibly a futures plus basis; the details have not yet been made public).
Camera Arbitral:
The Camera Arbitral is a non-profit organization made up of 23 committee members (including industry, producers, exporters and processors), and is charged with setting a price for "to be fixed" contracts, a common form of commodity trade in which an advisory board sets price terms which are then valid for 24 hours. It is a holdover from when marketing was more problematic, especially during the period of high inflation, and limited knowledge of farmers regarding world markets. The Camera is a sister organization to the Mercado a Termino, or futures market. In another role, the Camara also serves as an unbiased arbiter of grain contract disputes between buyer and seller.
As noted above, the Camera's role in price-setting is changing, with this change initiated by the suspension of trading for "to be fixed" contracts for sunflower-seed. Although sunflower-seed are not the only grain for which prices are set in this manner, it was felt by the government (through its "policing"role) that one party to the transaction could have greater power, and thus influence, on setting of the final price. But, the suspension of trading also had much to do with the understanding that markets need to set prices, (and not subjective price setting via committee, although the committee does look at market conditions in their deliberations) and thus could be considered as part of Argentina's serious efforts to be a more important world player.
Traders:
Grain traders have essentially the same role in Argentina as in other markets. They examine the supply and demand situation worldwide, and use both local and international pricing mechanisms to settle on contract terms. Argentine traders have often been aggressive in marketing grain, and have had at times a role in lowering world grain prices. Local traders are active in other futures markets as well, and often use the Chicago market to hedge, as the volume in the local market is not sufficient to cover all sales. This presents a difficulty for the local market, as reduced traded volume and market liquidity reduce the quality of market information available locally.
Bolsas de Cereales:
There are two main trading locations in Argentina. The first, the Bolsa de Cereales, is located in Buenos Aires, and trades the main grain commodities, namely corn, soybeans, wheat and sunflower-seed. Its operational environment is similar to the Chicago Board of Trade. That is, it uses distinct contract months and an open outcry system for exchanging bids and information. Grains are priced with a set trading time period for each commodity. Contracts are available for every month, and trading is normally done in single ½ hour sessions for each commodity.
In contrast, the Bolsa de Commercio, located in Rosario, trades the same commodities, but adds sorghum, and uses a cash-settlement index for soybeans. Other notable differences are that the Bolsa de Cereales trades on delivery to several Argentine ports, while Rosario's market trades only on delivery to its local port. Finally, trade volume in Buenos Aires, at about 20 million metric tons in the most recently completed year, is about 10 times greater than that of Rosario.
With the noted changes in the system and adding several more that are being contemplated, traded market volume should increase. Estimates vary, but some believe that within a few years, market volume could be 50 mmt (which approximates 100 percent of current grain and oilseed production), up from the 20 mmt recorded last year. Achieving such a figure would require training and education to get more people (farmers, brokers) involved in this type of marketing. Other market analysts are more conservative, and believe that volume could double within five years.
Other Marketing Tools
In addition to the futures and trading system outlined above, there is a unique mechanism available to Argentine farmers to disperse their grain, called "warrants". Warrants were developed in order to improve grain flow through the system by providing the farmers with a method to price their grain while holding it in country storage facilities, instead of rushing to the port to sell. This had the benefit of reducing the crush of grain at the port. They can also be used by the farmers as collateral.
Conclusion
A number of advances have been made in Argentina's production and marketing systems. Still, much remains to be completed to obtain an efficient system that benefits all in Argentina's agricultural industry. With more transparent price development, plus increased participation in the local market by traders from Argentina's grain customers and wider distribution of information, its grain marketing should become more orderly, with fewer and less violent price swings. Further, as farmers become more aware of options open to them, they could retain more of any profits generated by advantageous timing of sales, and take a more active role (that is selling directly to the exporter or miller, instead of using the now-common practice of selling to a middleman) in marketing.
Increased profit potential, one of the factors driving Argentina's recent gains in production, could thus be expected to continue pushing output higher. However, as Argentina becomes more
integrated in world markets, world supply and demand conditions will ultimately dictate the range of commodity prices.
Prepared by Randal J. Hager, Agricultural Attache, American Embassy, Buenos Aires. He may be reached for further information at (011-54-1) 777-8054.
India's Wheat Situation Unclear
Developments in India's wheat crop, government procurement, forthcoming elections, and exchange rate will all impact its demand for imported wheat. India's wheat needs continue to require ever-increasing supplies, despite strong growth in domestic production.
The initial optimism for the 1998 wheat harvest has been tempered somewhat by recent adverse weather developments. The entire wheat belt, particularly the major surplus states of Punjab, Haryana and Uttar Pradesh, has been experiencing unusually heavy rains and overcast conditions since the beginning of December. Typically, most wheat-producing areas receive some showers during December, which are generally beneficial for the non-irrigated crop. But this year the rainfall has been unusually heavy and continuous, affecting seeding in areas where wheat is normally late-planted. Sowing will be reduced in such areas unless rains stop and soil moisture levels normalize.
In areas where wheat was planted prior to December (about 80 percent of the total area, mostly in Punjab, Haryana, and Uttar Pradesh), germination and growth are likely to be retarded by excessive rain. Damage may have already occurred in some areas, necessitating re-planting. However, improved soil moisture in non-irrigated wheat producing states like Madhya Pradesh should aid plant growth. A clearer picture of the planted area and crop outlook will emerge only by the end of January.
Wheat Offtake Low, Stocks Comfortable
Offtake of wheat from government stocks over the last year has remained lower and is now distributed mostly via the Public Distribution System (PDS) programs. Unlike last year, the government is not selling wheat in the open market, which has helped to conserve government wheat stocks. For example, for the period August through October 1997, 1.6 million tons was released compared with 3.1 million tons for the same period in 1996. Although the November and December figures are not yet available, indications are that low open market prices kept offtake relatively unchanged.
Government-held wheat stocks in November were 8.0 million tons compared with 8.3 million tons in October and 9.7 million tons in November 1996. There are 750,000 tons of Australian wheat contracted earlier this year that are expected to arrive between January and March 1998; therefore, total wheat supplies available to the government for the PDS from November 1997 to March 1998 will be 8.75 million tons. Even if the monthly wheat offtake were to double during the first quarter of calendar year 1998 to 1 million tons (previous levels), government carryover stocks on April 1, 1998 would still reach 4.5 million tons compared with 3.2 million tons the year before. The target level of government buffer stocks on April 1 is 3.7 million tons.
Will India Import Wheat in 1998/99?
Wheat imports during 1998/99 will depend on a number of factors:
Historically, the government has never announced a support price lower than the previous year's level. However, the initial price for 1998 wheat of rs4,550 per ton ($116) is lower than the effective support price of rs4,750 ($121) for 1997 wheat. Therefore, unless the new government announces a substantial bonus before the wheat harvest next spring, procurement is likely to be adversely affected.
A poor 1998 monsoon (June-September) would affect grain production, necessitating increases in the distribution of government stocks. Furthermore, most grain deficient states have been demanding larger grain allocations from the government stocks for the Targeted Public Distribution System. If the new government gives in to their demand and/or uses its stocks to intervene in the local market to lessen price increases, then there could be significant draw down in government inventories. These would replenished by means of imports.
The rupee has lost about 10 percent of its value compared with the United States dollar over the past two months; continued depreciation would make imports costlier in local currency, possibly necessitating larger food subsidies. Depreciation could also reduce domestic grain supplies by encouraging exports of rice and wheat flour. On December 23, the government announced that exports of 500,000 tons of wheat products (flour, semolina, etc.) will be permitted up to March 31, 1998. These must be in bulk or consumer packs and export contracts must be registered with the government's Agricultural and Processed Food Products Export Development Authority (APEDA).
Based on reports from the Office of Agricultural Affairs, American Embassy, New Delhi. For further information, please contact Rick O'Meara at (202) 720-4933.
GRAIN: WORLD MARKETS AND TRADE FOREIGN COUNTRIES' POLICIES AND PROGRAMS INDEX OF ARTICLES FOR 1997
ARGENTINA
--Argentina's Grain Export Future Appears Promising (Jan)
--Argentina Announces New Grain Standard (Jun)
AUSTRALIA
--Proposed New AWB Structure Leaves Single-Desk Export Monopoly Intact (Apr)
BURMA
-- Burma Lowers Sights on Rice Acreage Expansion (Mar)
-- Burma Announces New Rice Procurement System (Dec)
CANADA
--Canadian Grain Marketing Undergoing Changes (Jun)
COTE d'IVOIRE
--Rice Market Liberalization in Cote d'Ivoire Leads to Restructuring (Nov)
CUBA
--Cuba's Trade Deficit Forces Sharp Reductions in Needed Grain Imports (Mar)
EGYPT
--Egypt Struggles to Contain Grain Import Demand (Apr)
EU
--EU Considering 1998/99 Set-Aside Program (Apr)
INDIA
--India Swings Back From Wheat Exporter to Importer (Jan)
--India Struggles for Balance in Grain Supplies ....... (Sept)
INDONESIA
--Indonesia's Grain Import Demand Strong ..... Economic Growth (Jul)
--Indonesia Begins Liberalization Process in Wheat Sector (Dec)
IRAQ
--Iraq Buys French, Australian and Argentine Wheat Under UN Agreement (Feb)
KOREA
--Korea's Economic Strides Lead to Large, Mature Grain Market (Aug)
MOROCCO
--Further Liberalization in Morocco Widens Market for U.S. Grains (Nov)
PERU
--Marketing Efforts Help Diversify U.S. Wheat Exports to Peru (Mar)
--Peru's Grain Industry Benefits from Market Liberalization (Sept)
PHILIPPINES
--U.S. Grain Exports to Benefit From Philippine Trade Liberalization (Dec)
NORTH KOREA
--North Korea Seeks Food Aid (Mar)
PAKISTAN
--Pakistan Shows Contrast as Importer, Exporter of Grains (Oct)
SRI LANKA
--Wheat Import Liberalization Under Discussion in Sri Lanka (Jul)
SOUTH AFRICA
--Demise of South African Grain Boards ..... U.S. Grain Exports (Oct)
TAIWAN
--U.S. Grain Producers Have Big Stake in Taiwan's Market (Jun)
THAILAND
--GSM Program for Thailand Heightens Opportunities for U.S. Grain Sector (Oct)
UNITED STATES
--A Review of U.S. Trade Restrictions on Grain Exports (Sept)
--Renewed Negotiating Authority and U.S. Grain Exports (Oct)
UZBEKISTAN
--Uzbekistan Struggles to Cover Wheat Requirements in Post-Soviet Disruption (Jul)
VENEZUELA
--Corn Import Restrictions Threaten U.S. Exports to Venezuela (Jun)
VIETNAM
--Vietnam Becomes Major Force in World Rice Market (Feb)
REGIONAL
--Increasing Demand for Paddy Anchors U.S. Position in Latin Rice Market (Mar)
--Asia's Tigers Appear Hungry for Grain (Apr)
--Eastern Europe Returns to Wheat Export Position as Market Reform Continues (Sept)
--Adverse Weather in Latin America Expands Market Opportunities for U.S. Rice (Oct)
--Asean Moves Forward in Tackling Difficult Trade Issues (Nov)
GLOBAL
--Sharp Rise in U.S. Bulk Grain Exports in FY 96 Not Matched by Grain Product Sales (Feb)
--A Roundup of Major Grain Exporters and Their Export Regimes (May)
--Value-Enhanced Corn Exports Provide Growing Niche Market for U.S. Producers (Jul)
--Surge in Wheat Imports in Several Nations Offset China and Russia Declines (Aug)
--Increasingly Broad World Wheat Demand is More Quality Conscious Than Before (Nov)
--U.S. Rough Rice Exports Off to Strong Start in 1997/98 (Dec)
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