Government Won’t Lift Curbs On Wheat Export Before Next Crop

Located in Asia, India is the 2nd largest wheat producer as well as consumer in the world. Owing to high domestic demand and rising domestic prices, the 2nd highest producer of the commodity restricted wheat exports in 2022. 

India’s Wheat And Broken Rice Export Restrictions 

The Government of India (GOI) in May 2022 restricted the exports of wheat and further the shipments of wheat flour from the month of July’22. However, a few shipments were still permitted on request in order to meet the food security needs of countries around the world. 

The primary reason behind restricting wheat exports was to ensure domestic availability of wheat owing to a surge in global demand witnessed since the Russian invasion of Ukraine the main global wheat exporter. Additionally, the government’s move was also aimed at curbing the rising domestic prices of the commodity due to a sub-power harvest brought on by a drought that struck major wheat-growing states in the country. 

Current Scenario 

Since the production of wheat was hampered in the previous year by summer’s early arrival in March and the impact it had on the Food Corporation of India’s procurement target, the government doesn’t plan on lifting restrictions on the export of wheat until the arrival of the following crop in the current year, which arrives in March or April. The Centre is likely to decide shortly whether to sell wheat from its stock on the open market in order to lower prices, which reached a record high on 24th January 23, due to a lack of supply. 

Factors To Consider 

According to sources, the government’s top priority is to make sure the price of the staple food grain doesn’t rise excessively on the domestic market, despite demands for the restrictions on wheat export to be eased.

An official stated, “There is no scope for allowing export when we have less availability. We will soon offer wheat for open market sale.”. In order to lower prices, flour millers have been requesting an early release of wheat from the stocks of the Food Corporation of India (FCI). The low output from the previous year and an increase in wheat exports in the first few months because of Russia and Ukraine have been the main causes of the shortage. Wheat has been arriving at a slower rate because farmers are carrying less stock. 

Commodity Pricing 

According to information from the government’s Price Monitoring Cell, the average retail price of wheat on the 24th of January was Rs 33.3 per kg, 17.6% more than the year before and 40.3% more than it was five years prior. Similarly, the average retail price of atta (wheat flour) on the same date was Rs 37.8 per kg, which is 19.8% higher than the previous year and 44.2% higher than the price at which it was selling five years earlier. 

According to data from the consumer affairs ministry, the modal retail price for wheat and atta on 24th January increased to Rs 29 and Rs 35 per kg, respectively, from Rs 22 and Rs 28 per kg six months prior. The wholesale price of atta is also following a similar trend. In the meantime, the trend indicates that due to supply issues, wheat prices are currently ruling at 41%–44% above the minimum support price (MSP) of Rs 2,015 per quintal across major mandis in Madhya Pradesh, Haryana, Punjab, and Rajasthan. According to data, on 24th January, the wholesale price of wheat at Sehore, one of the largest mandis in Madhya Pradesh, crossed Rs 2,900 per quintal, and it was selling for Rs 2,815 in Delhi. 

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