Modi Government's Big Decision: Wheat Prices Will Stay Stable

Key highlights

• No change in wheat import duty.
• Wheat prices are expected to remain stable.
• The government has sufficient wheat stock.
• Distribution to 80 crore people without crisis.
• Average price in India: Rs 2400-2600 per quintal.
• Importing wheat is costlier than local wheat.
• Government monitoring the market for prevention of hoarding.
• Farmers are protected from low-price imports.
• Record wheat production exceeding the demand.
• Rainfall impacts future price trends.

The central government has decided not to change the import duty on wheat. This move aims to keep wheat prices stable in the country. Even though there has been record production of wheat, rumors suggested that wheat prices could reach around Rs 3000 per quintal by winter. This expectation led many farmers and traders to hold back their wheat stock. However, the government's decision is likely to prevent a sharp rise in the prices.

Wheat Stock Availability

The government has assured that there is a sufficient stock of wheat. Despite distributing free wheat to 80 crore people, the country still has plenty of wheat left. There will be no wheat crisis. The government is confident that wheat prices will not rise significantly.

Current Wheat Prices

In India, the average price of wheat is between Rs 2400 and Rs 2600 per quintal. On the international market, wheat prices are lower. For instance, wheat on the Chicago Board of Trade (CBOT) is priced at $6.84 per bushel (Rs 21,000 per ton), and Russian wheat costs about $235 per ton (Rs 19,575). If imported, adding 40% import duty and freight charges makes it more expensive than Indian wheat. Hence, some groups have requested to reduce the import duty to zero, but the government has refused this request.

Ensuring Price Stability

The Modi government's third term has a 100-day agenda that includes controlling food grain prices. Up to June 11, 2024, the government procured 266 lakh metric tonnes of wheat from farmers at the minimum support price (MSP) of Rs 2275 per quintal. The government needs 184 lakh metric tonnes for public distribution and welfare schemes, and it has sufficient stock to meet this requirement. The Department of Consumer Affairs, Food, and Public Distribution is actively monitoring market prices and will act against hoarding to prevent price hikes.

Also Read: Shivraj Singh Chauhan Prepares 100-Day Plan for Farmers as New Agriculture Minister

Supporting Farmers

The decision not to reduce the import duty is intended to protect Indian farmers. Reducing the import duty would allow business groups to import cheap wheat, forcing local farmers to sell at lower prices. This could lead to future price manipulation by these groups. Keeping the import duty unchanged ensures that wheat prices remain above MSP, benefiting farmers.

Market Expectations

Some market players believe wheat prices might still rise, predicting wheat flour prices to reach Rs 28 to Rs 31 per kg in the next 15 days, and wheat prices to reach Rs 2800 to Rs 3000 per quintal by winter. The Roller Flour Millers Federation of India has also requested the government to allow zero-duty wheat imports.

Record Wheat Production

The central government states that wheat production in the country exceeds demand. While the annual consumption is 1050 lakh metric tonnes, the current season is expected to produce a record 1129.25 lakh metric tonnes. As of January 1, 2024, the wheat stock was 163.53 lakh tonnes, well above the buffer standard of 138 lakh metric tonnes. Wheat stocks have never fallen below the required buffer stock levels.

Also Read: Government to Procure 100% Tur Dal from Farmers at MSP

CMV360 Says

With a sufficient stockpile and stable market strategies, the government ensures that wheat prices will not increase dramatically. If the monsoon season brings good rain, there will be better sowing in the Rabi season, further stabilizing wheat prices. However, less rain could lead to a price rise. For now, farmers are advised to stay informed and make selling decisions accordingly.