Posted on May, 7, 2023 at 11:23 pm
To ensure supplies and rule out any possibility of spike in domestic prices, the government has dismissed lifting ban on exports of wheat and products such as atta this year and is also considering imposition of stockholding limits against possibility of hoarding of the commodity.
Sources told FE that the aim is to ensure that inflation in cereals, which had witnessed a spike in the last few months, is kept in check. “There will be no lifting of the ban on wheat exports this year while we are keeping the option of imposing stockholding limits to improve supplies,” an official said. A high-level inter-ministerial committee has been monitoring prices of essential commodities on a regular interval. India had imposed a ban on wheat exports except on shipments under government-to-government arrangements for food security — in May, 2022. The ban on shipment of wheat was necessitated by a drop in the rabi production of the cereal in the 2021-22 crop year (July-June) and procurement by government agencies dropping 56.6% to only 18.8 million tonne (MT) against 43.3 MT purchased from the farmers in the 2021-22 season (April-June).
Retail wheat inflation rose by 19.91% in March 2023, a moderate decline from a high of 25.37% in the previous month. The inflation in wheat had been in the double digit since June, 2022. Currently, the mandi prices of wheat are ruling around the minimum support price (MSP) of `2,125/quintal for 2023-24 season. Sources said that with the government buying more than 24 MT from farmers under the MSP operations so far, up 40% on year, there would be sufficient grain available at the disposal to carry out open market sale of the commodity for bulk purchasers if prices rise. Officials said that overall wheat purchase in the current season is likely to be around 27 MT.
As on May 1, the Food Corporation of India (FCI) has wheat stock of 28.52 MT while the government needs 18.4 MT annually for the implementation of the national food security act. Major contributors to wheat procurement so far have been Punjab (11.42 MT), Haryana (6.03 MT) and Madhya Pradesh (6.2 MT).
The MSP purchases in Uttar Pradesh (0.14 MT) and Rajasthan (0.18 MT) have just picked up pace. In both the states, the FCI has started its operation of MSP purchase and has designated all its godowns in key producing states as ‘procurmenet centres’ where farmers can sell their commodity.
The food ministry has also decided to sell surplus wheat stocks held with the FCI under the open market sale scheme (OMSS) on a quarterly basis from July.
As per earlier policy, FCI had been selling surplus wheat to bulk buyers such as flour millers and food companies during the lean season (January-March). Under the OMSS, the FCI sells food grains, especially wheat and rice, at predetermined prices in the open market from time to time to bulk consumers and private traders.
The agriculture ministry’s estimate of a record wheat harvest of 112.18 MT for the 2022-23 crop year (July-June).
The wheat output in the 2021-22 crop year, as per the agriculture ministry, has declined marginally to 107.7 MT because of heatwaves during the flowering stage of the crop in March. However, trade sources had pegged the wheat output in previous crop year around 99-100 MT.
Source: Financial Express