According to Union Food Secretary Rajiv Chopra, there has been an increase in wheat prices over the previous month, with a rise of about 8% at the mandi level. According to industry participants, the Centre’s regulation, which limits the stock holding of wheat after a 15-year hiatus, will probably cool prices.
To properly manage the nation’s overall food security, stop stockpiling, and stop shady speculation, the Centre issued an order limiting wheat stock on June 12. The directive went into effect on June 12 and will be in place through March 31, 2024, for the current fiscal year.
Retailers have been given 10 metric tonnes (mt) for each retail store, while holdings by traders and wholesalers have been restricted to 3,000 mt of storage. They have been instructed to reduce their stock holdings to the permissible levels within 30 days of the publication of this notification in cases where they are greater than the limits.
“The order will efficiently bring down prices as people sell off the amounts exceeding the limits, thus putting more wheat into the markets, which will meet the demands of consumers in the country,” said Anand Chandra, Co-founder of Arya.ag, who controls 30,000 storage warehouses for wheat across the nation.
Wheat prices have increased during the past month. Prices have risen by about 8% at the mandi level. According to Food Secretary Rajiv Chopra, the government has set a stock restriction on wheat even if wholesale and retail prices have not increased by an equal proportion.
The action is the most recent in a line of measures the government has taken to reduce the increase in wheat prices over the past 12 months. The government outlawed all wheat exports in May of last year. This embargo has not yet been lifted.
Additionally, in an effort to keep wheat retail prices under control, the central government agreed to sell 15 lakh tonnes of wheat in the first phase through an online auction to flour mills, independent merchants, large purchasers, and producers of wheat-based products.
Moneycontrol consulted a wide range of stakeholders and discovered that due to the high rates at which wheat was initially sold, many traders had not stocked up on wheat in large quantities this year.
“The prices generally hover around Rs 18-19 per kilo but have remained high, above Rs 22 per kilo this year. People were waiting for prices to come down, but they kept on climbing, and most thus ended up not stocking any wheat this year,” said Ashish Khandelwal, Managing Director of BL Agro Industries which is an oil and food manufacturing company which weighs the trading of wheat too.
The mill prices began to decrease a day following the Center’s announcement. On June 12, Delhi’s flour mills offered a quintal of wheat for Rs 2,455, but on June 13, that price dropped to Rs 2,390.
“There is panic in the market since the announcements have been made. Flour mills are aware that people who are hoarding wheat will reduce their prices and try to get rid of it quickly before prices fall any further,” Ajay Rathore, owner of Bajrang Traders in Delhi spoke to Moneycontrol.
According to the government’s third advanced estimate, wheat production would total 112.7 million tonnes, an increase of five million tonnes from the previous year. Experts have noted that this may be greater than the real figures, though.
“Trade sources suggest that wheat production this year has been less than the advanced estimates of the government. Similarly, domestic wheat consumption is estimated to be about eight to 10 mt more than the Niti Aayog’s estimate of 97 mt. With the threat of El Nino hovering over the country, India needs to use all its resources to ensure food security in a difficult year,” erstwhile Union secretary Siraj Hussain spoke to Moneycontrol on June 7.
“Production has been down in the past two years due to climatic issues the country is facing. The prices have primarily gone up due to a reduction in supply and not because of hoarding. In fact, at this time last year, we held about one million tonnes of wheat, whereas it is 0.6 million tonnes this year,” says Chandra working at Arya.ag.
