India hikes wheat import duty to support local farmers

Local wheat prices have fallen over 11 percent in 2019 due to ample supply from last year’s crop and forecasts of record output. (AFP)
Updated 27 April 2019
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India hikes wheat import duty to support local farmers

  • It comes as Prime Minister Narendra Modi’s party looks to contain rural discontent due to lower crop prices
  • India’s wheat production will rise 2 percent in 2019 from the year before to a record 99.12 million tons, according to estimates

MUMBAI: India has raised its import duty on wheat to 40 percent from 30 percent, the government said late on Friday, as the world’s No. 2 producer of the grain tries to support local farmers.
The step comes as Prime Minister Narendra Modi’s party looks to contain rural discontent due to lower crop prices amid voting in a general election that began on April 11 and ends on May 19.
Local wheat prices have fallen over 11 percent in 2019 due to ample supply from last year’s crop and forecasts of record output. The hike in duty is likely to make imports of wheat unviable for flour mills even after recent declines in global prices , potentially dragging further on global grain markets.
“Local wheat production is higher. The government is now trying to ensure prices remain above support levels,” said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.
India has raised the price at which it buys new-season wheat from local farmers by 6 percent to 1,840 rupees per 100 kg for 2019.
The government usually purchases about a quarter of such wheat from farmers at state-set prices to build stocks to run a major food welfare program.
India’s wheat production will rise 2 percent in 2019 from the year before to a record 99.12 million tons, according to estimates from the country’s agriculture department.
Only one wheat crop is grown in India each year, with planting starting in late October and harvesting in March.
Government wheat stocks stood at 17 million tons as of April 1, up nearly 30 percent from the same time a year ago.
“At 40 percent import duty, imports are not viable for flour mills. They have to buy local crop,” said a Mumbai-based grain dealer with a global trading firm. He declined to be identified as he was not authorized to speak with media.
Indian flour millers imported 1.65 million tons of wheat in the 2017/18 fiscal year, down from 5.7 million tons the year before. Those shipments were mainly from Australia, Russia and Ukraine.


Jubail petrochemical complex could lead to homegrown car industry

Updated 3 sec ago
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Jubail petrochemical complex could lead to homegrown car industry

LONDON: Advanced Petrochemical and South Korean SK Gas plan to develop a $1.8bn petrochemical complex in Jubail that could help plans to develop a homegrown car industry in Saudi Arabia.
It comes amid increased economic cooperation between Riyadh and Seoul following an $8.3 billion economic co-operation pact struck this week during the first visit of Saudi Crown Prince Mohammed bin Salman to South Korea.
The Saudi petchem producer said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex. The project is expected to produce “high value plastics grades for the automotive industry” as well as other specialized grades that are currently being imported into Saudi Arabia, Advanced Petrochemical said in a filing to the Tadawul stock exchange on Wednesday.
Separately the company said it has received propane feedstock allocation from the Kingdom’s Ministry of Energy, Industry and Mineral Resources for the project, which is slated to start in 2024.
Advanced Petrochemical also disclosed in a third filing that it was conducting a feasibility study for a cracker project in the Kingdom.
These latest deals reflect twin objectives to develop high-value manufacturing in the Kingdom to create jobs while also investing heavily in the petrochemicals sector to capitalize on rising global demand for high value plastics.
Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region, according to the US export.gov website.The addition of potentially as many as 3 million women drivers to the roads is expected to further spur domestic demand.
Saudi companies, spearheaded by Saudi Aramco, are investing billions of dollars in petrochemical projects worldwide to meet rising global demand. Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then, according to the International Energy Agency (IEA).
Demand for plastics — the key driver for the petchem industry — has outpaced all other bulk materials (such as steel, aluminum, or cement), nearly doubling since 2000, the IEA estimates.