Embassy Archives Embassy Archives

India awards contract for import of wheat to US companies - ADM and Cargill

Washington, DC
July 10, 2006 

US companies ADM and Cargill have been awarded contracts amounting to US$ 141 million by the Indian Government out of a total of 2.2 million tonnes of wheat at a value of $435 million being imported by India between September 2006 and January 2007. 

ADM based in Decatur, Illinois has been awarded a contract for supply of 300,000 tonnes for $ 59.5 million. Cargill based in Minnetonka, Minnesota has been awarded a contract for supply of 405,000 tonnes of wheat for a value of $ 81.6 million. 

India is importing wheat at zero per cent import duty for the first time in six years to replenish its buffer stocks and control rising domestic wheat prices. In May, 2006 India awarded contracts for import of 0.8 million tonne of wheat to Australian Wheat Board. Thereafter, the Government of India rationalized its standards for import of wheat and harmonized them with the standards of the Codex Alimentarius Commission enabling export of wheat to India by US companies. In the second round, India invited tenders for import of 2.2 million tonnes of wheat out of which the two US companies got contracts for supply of 705,000 tonnes of wheat for a value of $ 141 million. 

India’s annual wheat production is about 72 million tonnes. The Food Corporation of India (FCI) procures wheat domestically from farmers for buffer stock and supply it to poor sections of the population through the public distribution system. This year, the Government liberalized its policy and allowed private companies to procure wheat directly from the farmers rather than only through notified markets. This led to an increase in market price for wheat. FCI could not procure adequate wheat from farmers for buffer stock purposes and for the public distribution system. Consequently, Government of India decided to import wheat through State Trading Corporation for FCI. 

In an effort to control domestic prices, the Government of India has also allowed import by private companies of wheat at 5% duty and pulses as well as sugar at zero per cent duty (Wheat till December 31, 2006, Pulses till March 31, 2007 and Sugar till September 30, 2006)