Roller flour mills in South India are worried over the hike in the wheat import duty as it makes them uncompetitive in the domestic market compared with their counterparts in wheat growing areas in the North.
Reacting to the last week’s hike in Customs duty to 30 per cent, DK Gupta, President, Tamil Nadu Roller Flour Mills Association, said the hike has come as a surprise particularly because imports had not been happening in recent months when it was first doubled to 20 per cent in November last.
Previously, mills had imported 50 per cent of their requirement at about ₹1,900 a quintal and blended it equally with domestic produce priced at about ₹2,100 for quality reasons. This also helped to average out the prices at about ₹2,000 which was viable for the roller flour mills in the South, where wheat is not grown. If the grain is moved from the North it costs ₹200more for transport in addition to two per cent wastage. Traders in wheat growing areas can directly move processed wheat products South at more competitive prices, he said. The hike in the name of protecting farmers is not justified, felt industry representatives. But wheat product prices will go up for the common man.
Even now wheat prices are up at about ₹2,040 after the duty hike. “That is just a start,” says MV Balasubramaniam, of Narusu’s Mills.Whatever, imports that had happened in recent years, including about 1.5 million tonnes last year, would not have impacted farmers in any way. Domestic production is at a high and well supported with about 33 mt , one-third of the production, being procured by government agencies.
In the last two years import prices had been lower than domestic prices for the mills in the South which had cut back on open market sales by FCI. Last year they had procured about 1.5 mt , he says based on industry estimates.
For instance, local produce under the open market scheme was ₹ 20 a kg but imported wheat at Tuticorin in South Tamil Nadu was ₹17.75. Mills in South India process about 4 mt of wheat annually. According to industry sources, the recent import duty hike will only benefit traders and millers in the wheat growing regions who can now tap the southern markets for wheat products like maida and atta.