According to the statistics released by the Food Ministry of India, the stocks of wheat are 11 per cent higher than the buffered standard set by the government. The surplus stood at 22.74 million tonnes at the beginning of this month. However, the state agency- Food Corporation of India (FCI) depicted a five-year dip in wheat supply due to a 57 per cent drop in procurements of wheat. This has been a result of a decrease in production and the forceful purchasing by Wheat Exporters for export purposes.
According to the buffered standard, the government is required to keep the buffer level at 20.52 million tonnes for wheat and 10.25 million tonnes for rice as of October 1. The rice stocks are currently double the buffer level and stand at 28.39 million tonnes. The surplus buffer stock is kept in order to meet demand from welfare schemes and emergencies.
Reasons Behind the Surplus
Amid a violent heatwave and spiralling global prices, the Government of India on the 13th of May decided to curb wheat exports. This was done in order to stabilise the wheat reserves and domestic prices. However, the government kept the option of Government-to-government (G2G) deals open for neighbouring countries and countries that are facing food security crises. India also considered exporting other processed commodities like wheat flour and maida to friendly countries through the same route, if the situation warranted.
According to the Food Ministry, wheat stocks are now adequate. The government’s wheat procurement fell to 18.79 million tonnes in the 2022-23 marketing year (April-May) from 43.34 million tonnes the preceding year, owing primarily to aggressive personal purchasing, though domestic output dropped sharply by 3 per cent.
The steep decline in procurement compelled the government to prohibit wheat exports in order to increase local availability and limit price increases. According to the agriculture ministry’s fourth advance estimate, wheat production will fall to 10.68 million tonnes in the 2021-22 crop year (July-June) from 10.95 million tonnes the preceding year. The sowing of new wheat crops will accelerate in the coming days.
Following the ban, Indian wheat importers and wheat exporters dampened their purchases, thus leading to a surplus in stocks. The government of India’s move to restrict the export of wheat resulted in an increase in reserves, thereby lowering the prices in both the domestic and international markets.
The government of India has several public distribution programmes wherein the government distributes grains including wheat to the marginal sections of society. The 11 per cent excess wheat stocks would aid in the distribution programmes.
Additionally, wheat sellers in and around the country will have the luxury of skimming out the margins since the prices are stable owing to the excess buffer reserves. Wheat importers will have to restrict their purchases but at the same time, India has always been self-sufficient in terms of wheat, therefore the impact on Wheat Importers will be limited.
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