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Informist, Tuesday, Sep 17, 2024

By J. Navya Sruthi and Pallavi Singhal

--ITC's Chatterjee: Traders hoarding wheat, expect prices to rise
--CONTEXT: ITC procurement & logistics head Chatterjee at Wheat Summit
--ITC's Chatterjee: Need to begin open mkt sales, imports of wheat
--ITC official: See 2024-25 wheat production at 100 mln tn

MUMBAI – Even small amounts of wheat imports and the government's weekly electronic auctions are crucial to bringing down the current domestic prices, Somnath Chatterjee, vice-president, head of procurement and logistics at ITC Ltd, said on the sidelines of Tefla's Wheat Summit today. 

"All commodity inflation is very high and internationally, Black Sea wheat (prices) are probably one of the lowest we have seen in years. So why not take advantage of that a little bit... import 2-3 mln tn (of wheat)," Chatterjee said. 

Importing 2-3 mln tn of wheat will stabilise domestic prices and indicate the government's intention to bring prices down, he said. It will also send a signal to those traders and stockists who are holding stocks, Chatterjee said. 

Currently, wheat imports attract 40% duty and the industry has been asking the government to either remove or reduce the same. If the government doesn't import wheat and does not give clarity about open market sales, domestic wheat prices could shoot up to 3,000 rupees per 100 kg, he said. Currently, wheat prices in Kota, Rajasthan, are 2,600-2,650 rupees per 100 kg.

According to him, open market sales of wheat need to begin immediately. "September is almost gone. And if they don't do anything now, they are only leading the speculation now... Whatever the government wants to do, they should come out and say it openly," Chatterjee said. 

Commenting on the government's recent reduction of stock limits for wheat market participants, Chatterjee said that the step will not lead to a major fall in prices. Most of the wheat is being held by "quasi farmers", who have deep-pocketed traders and investors behind them, Chatterjee said. "They are under no stock limit," he added. These traders and farmers hold wheat, expecting a rise in prices, the official said.  

On Friday, the government reduced the stock limits for traders/wholesalers to 2,000 tn, from 3,000 tn earlier, and for processors to 60% of the monthly installed capacity multiplied by the remaining months in the current financial year ending March. However, there is no change in the stock limit for retailers, which will remain at 10 tn. The stock limit for big chain retailers has also been retained at 10 tn per outlet, but the total wheat big retail chains can hold has been revised to 10 times the total number of outlets from 3,000 tn earlier.

Under the open market sales scheme, the government fixes the price of rice and wheat and sells them to bulk buyers such as states and private millers through electronic auctions. The government's weekly electronic auctions of rice and wheat are to cool off retail prices across the country.

For the current year, the government has set the reserve price of fair and average quality wheat at 2,325 rupees per 100 kg, according to a letter from the Ministry of Consumer Affairs, Food, and Public Distribution to FCI, reviewed by Informist. The price of wheat under reduced specifications was set at 2,300 rupees per 100 kg.

During 2023-24 (Apr-Mar), wheat sales under the open market scheme were at an all-time high of 9.4 mln tn. Last year, the reserve price for the fair and average quality of wheat was 2,150 rupees per 100 kg, and 2,125 rupees for the reduced specification quality wheat. 

According to another official from ITC, wheat production during the 2023-24 rabi season was around 100 mln tn, which is far below the government's estimate of 112.9 mln tn.  End

Edited by Aditya Sakorkar

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