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India raises import duty on wheat

India raises import duty on wheat

The move shouldn’t affect market prices, a commodity specialist said

By Diego Flammini
Staff Writer
Farms.com

India’s move to protect local farmers through a wheat duty increase shouldn’t have any effect on commodity prices, said Moe Agostino, chief commodity strategist with Farms.com.

Increasing the import duty from 30 to 40 per cent is intended to force local end users to buy from national farmers, Agostino said.

“By making wheat imports more expensive, they’re hoping flour mills will stop bringing in wheat from other countries and just use the national supply,” Agostino told Farms.com. “This is an isolated thing and won’t change market prices.”

The increased duties could also discourage exporters from targeting the Indian wheat market.

“We export virtually no wheat to India anymore mainly because their production is quite high and, (in) some years, India exports wheat,” Steve Mercer, vice-president of communications with the U.S. Wheat Associates, told Farms.com in an email. “This hike in import duties is within the Indian government’s protectionist pattern.”

Any movement in market prices is incumbent on a trade deal between the U.S. and China, Agostino added.

Indian farmers could produce almost 100 million tonnes (110 million tons) of wheat in 2019, the country’s ag department forecast. That harvest represents about a 2 per cent increase from the year before.

“Local wheat production is higher,” Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai, told Reuters.

India will also pay local farmers more for their wheat.

An Indian producer will earn about 1,840 rupees (US$26.36) per 100 kg (220 pounds) of wheat. That payment represents an increase of 6 percent from 1,729 rupees (US$24.77) last year.


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