Government Plans Wheat Sales to Stabilise Prices Amid Rising Costs

NewDelhi: In response to the recent surge in wheat prices, the Indian government is gearing up to release wheat from its reserves to key consumers such as flour mills and biscuit manufacturers. This initiative aims to ensure affordability for consumers by increasing wheat supply in the market and curbing price hikes.

The Food Corporation of India (FCI) has been authorized by the central government to sell wheat from its inventory through the Open Market Sale Scheme (OMSS). Starting next month, wheat will be sold at Rs 23,250 per tonne, which is 12% lower than current market rates. However, the exact quantity of wheat to be sold under this scheme has not yet been finalized.

Last year, faced with similar price escalations, FCI successfully sold a record 10 million metric tonnes of wheat in the open market during the financial year 2023-24. This year’s move is expected to attract significant interest from private players, as indicated by a Mumbai-based trading house dealer.

Wheat prices in India have risen by 6% over the past year, driven partly by crop damage in 2022 and 2023 due to increasing temperatures. The government had imposed a ban on wheat exports in May 2022, which remains in effect. Despite this, wheat production for the current year has fallen by 6.24% compared to the government’s estimated 112 million metric tonnes, leading to a decrease in wheat stocks in state warehouses from 31.5 million tonnes to 29.9 million tonnes.

In efforts to manage wheat stocks and stabilize prices, the government also set stock limits for traders in June. Additionally, India is considering lifting a six-year ban on wheat imports, with a 40% tax currently in place. Removing this tax could enable private traders and mills to import wheat from countries like Russia and Australia, further easing supply pressures and price volatility in the market.

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