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Informist, Tuesday, Sep 17, 2024

MUMBAI – The government may further lower stock limits on wheat to 500 tn by February from the current 2,000 tn, given the low stocks with it, Khalid Khan, vice-president of bulk commodities and supply chain at ITC Ltd's agri division, said. Khan was speaking at The Wheat Summit in Mumbai.

"The government is convinced that traders and millers have enough stocks as government procurement was lower this time and (thus) the government can make limits stricter as (marketing) season 2024-25 (Apr-Mar) nears its end," he said. 

According to Khan, prices of wheat could touch 30 rupees per kg if open market sales of the commodity do not begin soon. However, even if open market sales begin, prices are unlikely to fall below 29 rupees per kg in retail markets, he said. According to Khan, open market sales will not affect prices largely because the government, according to the industry's estimate, has only about 5.4 mln tn to offload in the next five months.

Under the open market sales scheme, the government fixes the price of rice and wheat to sell to bulk buyers such as states and private millers through weekly electronic auctions. These auctions are meant to cool retail prices of rice and wheat across the country.

According to a presentation by Khan earlier in the day, of the 100 mln tn of wheat produced in 2023-24 as per industry estimates, 30 mln tn was retained by farmers and almost 26 mln tn was procured by the government, with the remaining in the hands of private traders. After accounting for the government's exports, wheat kept aside for the public distribution system, and for Bharat sales, only 5.4 mln tn would be left with the government for open market sales, the presentation showed.

To tackle rising wheat prices, the government on Friday reduced stock limits for traders/wholesalers to 2,000 tn, from 3,000 tn, and for processors to 60% of the monthly installed capacity multiplied by the months remaining in the current financial year ending Mar 31. However, there was no change in the stock limit for retailers, which remained at 10 tn. The stock limit for big chain retailers was also kept steady at 10 tn per outlet, but the total wheat big retail chains can hold was revised to 10 times the total number of outlets, from 3,000 tn earlier.

For the current marketing 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 the Food Corp of India, 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 fair and average quality of wheat was 2,150 rupees per 100 kg, and 2,125 rupees for wheat of reduced quality.  End
 

Reported by Pallavi Singhal and J. Navya Sruthi

Edited by Rajeev Pai

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