Traders and suppliers are in trouble as Cargill, and ITC terminating wheat procurement contracts.
As a result of the restriction placed on the export of the crop, export companies like Cargill and others have begun terminating their wheat procurement contracts with local traders. This has put suppliers in a difficult position because they do not have the capacity to store wheat.
ITC, the most significant wheat exporter in the country, has declared a state of force majeure. ‘The government of India has issued a directive that prohibits the export of wheat with immediate effect. This has led to the occurrence of a force majeure event. As a direct consequence of this, the entirety of our balance contract with you is thus null and void with immediate effect ‘ITC stated. ‘The purchase contracts of wheat that you and ITC entered into for delivery at port locations were intended for exports from India,’ you write in one of the contracts.
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Wheat suppliers have been informed by Cargill that the company will accept delivery of loaded wheat until May 14th. After that time, the company will not take any wheat that has been loaded.
A trader from Madhya Pradesh who did not wish to be identified said that ‘as the MNCs have started sending order cancellation notifications, it looks like now there is no hope that the government may allow further relaxations to the May 13 export ban notification.’ ‘As the MNCs have started sending order cancellation notifications, it looks like now there is no hope that the government may allow further relaxations to the May 13 export ban notification,’ the trader said. ‘There is no way for us to gain redress because our case cannot stand in the court of law, where the government is only worried about farmers and consumers. There are no other options available to us.’
‘Procurement for the Government has Been Stopped’
As a result of rising domestic wheat and flour prices and the likelihood that a heatwave may damage crops, India decided to implement the restriction. According to Gopaldas Agarwal, a renowned grain dealer in Indore, ‘the government had closed up procurement at many sites due to low response from farmers, who were getting decent rates in the markets.’ This was said by Gopaldas Agarwal.
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‘Now, ever since the export ban was implemented, both the open market and the APMC (Agricultural Produce Market Committee) rates in the Indore market have plummeted by 12 to 13 percent. This is because there are currently no buyers for wheat in the open trade, and neither the government nor private companies are making any purchases. At the Kandla port, grain merchants who had previously sold wheat to large corporations have reported having difficulty unloading wheat.’
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