Indian Government To Offer Wheat At Reduced Prices To Alleviate Consumer Burden

The Indian government is set to offer 16 lakh tons of wheat in the open market at a reduced reserve price. This move by the government is aimed at providing relief to consumers who are facing high food prices. The wheat will be made available to agencies such as the National Agricultural Cooperative Marketing Federation of India Limited (NAFED) and Kendriya Bhandar, which will sell wheat flour (atta) at a price lower than the current MRP of Rs 29.5/ kg. The Food Corporation of India (FCI) has already auctioned over nine lakh tons of wheat in the open market.

All-time High Wheat Prices

Domestic wheat prices soared to an all-time high at Rs. 32,500 rupees ($393.36)/ ton in January 2023, significantly more than the government-set buying price of Rs. 21,250. Despite the recent surge, the area dedicated to planting wheat in India has remained unchanged. As per the Ministry of Agriculture & Farmers’ Welfare, for the current crop year (2022/23), the planting area has grown by 0.4% to 34.32 million hectares as compared to the last year. However, this increase in the area may not result in a corresponding increase in production, as the output of wheat fell last year due to a heatwave.

Mandi Prices Of Wheat

In some regions of Madhya Pradesh, Maharashtra, and Gujarat, farmers have started bringing their newly harvested wheat crops to mandis for the current marketing season, which will begin on 1 April 2023. Industry experts have reported that the mandi prices of the crop have been ranging between Rs 2,400-2,500/ quintal, compared to the MSP of Rs 2,125/ quintal for the 2023-24 marketing season.

Insight

The Indian government is yet to decide on the reserve price at which the wheat will be sold. Selling the wheat below the Minimum Support Price (MSP) could be counterproductive, as traders may resell the wheat back to the government at MSP. The government’s decision on the reserve price is expected to be made in the coming days.