With retail prices of wheat and atta (flour) rising continuously since May, the Indian government is worried over the last few days on bringing down prices. It is considering various options, including imports on government-to-government basis with the main objective of increasing domestic supplies. This is mainly in view of over 40 million tonnes (mt) of grain still hoarded inside the country.

The Agriculture Ministry has estimated wheat production in 2022-23 crop year at a record 112.74 mt. The wheat started arriving in the market from April and the government procured about 26.2 mt of this year’s production.

After factoring 30-35 mt, which is used for own consumption and seed and feed purposes, and additional 9-10 mt declared stock held by processors and stockists as of July 31, there should be 42-48 mt of wheat available in the market throughout the year. “When this stock, which is outside the radar of stock limit, will be released in the market no one knows,” an official said pointing to urgency of the issue of wheat price rise.

Mandi arrivals

Even the official Agmarknet portal shows that the 21 mt of wheat arrived in various mandis across the country between March 1 and July 31 this year.

The government has limited options such as removing import duty from current 44 per cent (including cess), as well as pruning the stringent plant quarantine list of weeds from the current 57, officials said. Some quantity of import can take place to send across the message that if required the government can buy more wheat from abroad, sources said.

The government has also to keep in mind how to dispose of the wheat if it wants to import directly as currently the Central Pool has ample stock to take care of the need for one year, while maintaining the mandatory buffer stock. Officials said the open market quota could be doubled to 6 mt, but the current monthly selling quantity is about 0.4 mt which means for the remaining period of this fiscal (August-March) 3.2 mt of wheat will be needed.

Sources said after the stock limit order imposed on June 12, one month’s time was given to traders, processors and stockists to conform to the maximum cap. However, the availability in the market has not increased after July 12. On the other hand, the all India average retail prices of wheat and atta increased in June and July from their previous month’s rates.

Price trend

According to Consumer Affairs Ministry data, wheat prices were ₹31.32/kg in April, ₹31.27 in May, ₹31.67 in June, ₹31.96 in July and ₹32.13 in August (1-3). Similarly, atta rates were ₹36.55/kg in April, ₹36.42 in May, ₹36.95 in June, ₹37.18 in July and ₹37.37 in August (1-3).

The highest price in the August 2 auction of FCI was recorded ₹2,500/quintal in West Bengal and Maharashtra while ₹2,430 in Madhya Pradesh, ₹2,410 in Gujarat, ₹2,405 in Jharkhand, ₹2,400 in Odisha and₹2,350 in Uttarakhand, trade sources said, pointing to the demand-driven price realisation in the auction in these States. In Karnataka, the highest price was ₹2,275/quintal and in Kerala it was ₹2,320/quintal.

The weighted average selling price in this week’s auction increased to ₹2,208.33/quintal for FAQ from ₹2,182.68/quintal in the previous week. The reserve price for FAQ wheat is ₹2,150/quintal. The weighted average selling price of URS wheat in current round was ₹2,219.29/quintal, up from ₹2,173.85/quintal in previous round, whereas the reserve price is ₹2,125/quintal.

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