Wheat spoiling in India

Laborers load sacks of rice and wheat on a truck at a grain market in Amritsar, India. The large stockpile is threatened by the lack of storage space.

MUMBAI, India -- A wheat stockpile in India that could feed 210 million people for a year is starting to spoil because the government lacks enough warehouses to store it -- a lightning rod for local discontent that could send ripples through the world market for the grain.

According to a government estimate obtained by The Associated Press, 17.8 million metric tons of wheat are exposed to the elements -- stored outdoors, under tarps in India's pounding monsoon rains. The wheat could alleviate hunger in a nation where one in two children are malnourished. Instead it is going to the dogs. As it wastes, it promises to drive global wheat prices, up 78 percent since June, even higher.

The government, faced with options more unpalatable to it than rotting food, has been letting the mountain of wheat grow. Exporting the grain would be politically explosive because food inflation has been in the double digits for months. The government buying less wheat from farmers in a country where more than half the population makes its living off the land is equally untenable. Selling more at subsidized prices to the poor is off the table because it would add to a swelling fiscal deficit.

"The government is acting like the biggest hoarder," said Biraj Patnaik, a principal adviser to the Supreme Court on right to food issues.

He says that wheat, about 30 percent of the country's total grain reserves, could feed some 210 million poor Indians for a year. He calculates that the government has spent about $5.5 billion on the wheat it now leaves out in the rain.

"You're going to end up losing as much money on food grains that go bad than the subsidies would incur if they distributed it to the poor," he said.

Siraj Hussain, the chairman of the Food Corporation of India, which manages distribution, declined to comment Friday, saying he is prohibited from speaking to the media while Parliament is in session.

The impact doesn't stop at India's borders. Global wheat supplies have been squeezed by drought and fires in Russia, heavy rains in Canada and locusts in Australia. Russia's decision this week to ban exports rocketed wheat prices to a two year high.

September contract wheat was trading at $7.91 a bushel Friday, up 78 percent from a June 9 low of $4.44 per bushel. "If it continues at this rate, we may have it doubling," said Jason Britt, president of Central States Commodities Inc., a brokerage in Kansas City, Mo.

The 17.8 million metric tons of wheat, which is almost as much as France consumes in a year, and now is beginning to spill from wet sacks in India, is counted as part of global wheat stocks. If it rots, it could drive prices up further because it would register as a decrease in global stocks even though it is not intended for export, Britt said.