India's grain export drive seen election-proof

NEW DELHI Mon Apr 14, 2014 1:38pm IST

A combine harvester is used to harvest wheat in a field on the outskirts of Ahmedabad March 14, 2013. REUTERS/Amit Dave

A combine harvester is used to harvest wheat in a field on the outskirts of Ahmedabad March 14, 2013.

Credit: Reuters/Amit Dave

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NEW DELHI (Reuters) - India's main opposition, the Bharatiya Janata Party (BJP), said it would push on with the country's drive to expand its grain exports if it forms the next government after elections that kicked off last week.

Since export restrictions were eased three years ago, India has emerged as the world's top rice exporter and a key supplier of wheat to Southeast Asia and the Middle East.

Some grain traders had speculated that export policy could change if the BJP ousted the ruling Congress party-led government, but a senior BJP official sought to allay those concerns.

"We favour building the Indian grain brand globally and that would need consistency in export policy," said Satpal Malik, the BJP vice-president in charge of drafting the farm policy section of the party's election manifesto.

Opinion polls show the BJP will win the most lower-house seats, putting its candidate for prime minister, Narendra Modi, in pole position to form the next government in the world's No.2 producer of grains.

Results of the five-week general election are due in mid-May.

EXPORT WINDOW OPEN

The current Congress-led government has conducted extensive purchases of wheat to support farmers, typically taking 25-30 million tonnes per year - or around a third of the annual crop.

But with the floor of $260 per tonne for government buying below the price Indian wheat can now fetch on international markets, exports have been profitable for state-run traders.

In a tender last Friday, Indian state traders fetched prices of as much as $285 per tonne for shipments to be made in May.

Although a defeat for the current government would bring shifts in an array of policies ranging from national security to the sale of state businesses, grain exports would be an area of continuity.

"It's ridiculous to think that every policy of the previous regime would be reversed after we come to power," said Malik, a former government minister.

Repeated bumper harvests due to ample monsoon rains have led grain stocks to pile up. At the start of the new fiscal year on April 1, rice and wheat stocks were 38 million tonnes, more than double the target of 16 million tonnes.

Malik said keeping the export window open would ensure better prices for local growers and, helping cut the fiscal burden of 1.15 trillion rupees ($19 billion) arising from food subsidies.

The BJP plans to roll out a programme to boost farm efficiency that Modi has championed in his home state of Gujarat. The system involves issuing cards to farmers recording soil properties such as productivity, mineral mix, water capacity and salinity.

[$1 = 60.1150 Rupees]

(Editing by Douglas Busvine and Joseph Radford)

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