The government’s decision to commence open market sales of wheat to bulk buyers like flour millers from its buffer stock with the Food Corporation of India (FCI) next month is a strategic move aimed at curbing any possibility of a rise in prices in the upcoming festive season. Last year, the FCI had initiated open market sale operations from June and had successfully offloaded a record 10 MT for bulk purchasers.
Traders have noted that while the current supply situation is quite adequate given the stocks available, there is a potential for a spike in prices during the festive season when demand typically increases. Presently, the FCI holds 25.89 MT of wheat stock against the buffer of 20.52 MT for October 1. After meeting the requirements for the public distribution system and other welfare schemes, which amounts to approximately 18.4 MT, there will be sufficient stocks of wheat available for market interventions as needed.
Sources have revealed that the government is closely monitoring wheat prices, which have remained stable over the last six months. The sales of wheat in the open market will kick off once there is a possibility of a price surge.
According to the department of consumer affairs, the modal retail price of wheat on Thursday was Rs 28/kg, maintaining the same level for the past six months. The food ministry has allocated 2.5 million tonnes of wheat for open market sales for the current fiscal year from the FCI’s stocks. Wheat will be offloaded at a price excluding transportation at Rs 2,325/quintal, which is lower than the prevailing market prices of around Rs 2,500/quintal.
President of the Uttar Pradesh Roller Flour Millers Associations, Dharmendra Jain, mentioned that while wheat prices are currently stable, there are concerns about supplies to southern states. In June, the government imposed stock holding limits on wheat for retailers, wholesalers, processors, and big-chain retailers until March 31, 2025.
Officials have clarified that there is no shortage of wheat in the country, and the imposition of stock holding limits on the commodity will help improve supplies. The government has ruled out lifting the export ban on wheat imposed in May 2022 and has no current plans to alter the duty structure on wheat imports.
Inflation in wheat was recorded at 6.95% in July on a yearly basis, and due to the record open market sales of wheat from FCI stocks, inflation has remained in single digits since August 2023. The agriculture ministry estimates wheat output in the 2023-24 crop year (July-June) at 112.92 MT.
Overall, the government’s proactive measures to manage wheat prices and ensure adequate supply demonstrate a commitment to stabilizing the market and meeting the demands of consumers and bulk buyers alike. With careful monitoring and strategic interventions, the government aims to navigate the challenges of the upcoming festive season successfully.