Wheat prices in India stabilised, export limitations successful

In the domestic mandis wholesale prices of wheat have managed to decline from their lifetime highs and have steadied as the Central Government timely implemented a host of policy interventions on the exports of the foodgrain. India has implemented new regulation in order to manage the nation's overall food security and address the needs of vulnerable neighbours and other nations. Wheat prices have increased globally as Russia and Ukraine  are significant wheat exporters. To get a deep knowledge on the wheat prices and the new policy on export limitation implemented by the Government, read below. 

Wheat prices were as high as Rs 2,400–2,500 per 100 kg in Indore, Madhya Pradesh, which is regarded as one of the important mandis, as opposed to Rs 2,000–2,1000 before the outbreak of the conflict in Ukraine. As recently produced rabi harvests enter the mandis, or physical markets, wheat prices often stay on the lower side during this time of year.

Crop production was greatly affected because of the heat waves in several wheat-growing regions in India ahead of the rabi harvest.

The present price of wheat in India is significantly higher than the Centre's guaranteed Minimum Support price of Rs 2,015 per 100 kg, which is an infrequent situation on its own.

Export demand for wheat got a boost because of the tension between Russia and Ukraine turning into a full-blown war, which resulted in lifetime high prices in the mandis of the staple foodgrain. 

Currently, wheat is trading a little below Rs 2,400 per 100 kg in Indore. In other markets too, wheat prices have somewhat softened.

“Going by the current trend it seems the price of the foodgrain will fall towards Rs 2,300 in the coming days,” said Indore-based veteran trader NK Agarwal.

India changed its export regulations for wheat and classified it as "prohibited" in order to manage the nation's overall food security and address the needs of vulnerable neighbours and other nations.

Due to the fact that both Ukraine and Russia are significant wheat exporters, wheat prices have significantly increased globally in recent months.

Wheat production in Ukraine is expected to decline 41 per cent or 13.5 million tonnes year-on-year in the 2022-23 season to around 19.5 million tonnes, as per US Department of Agriculture’s recent forecast.

The Indian government went beyond merely limiting wheat exports.
The Center has restricted the exports of wheat flour (atta), as well as those of associated goods including maida, semolina (rava/sirgi), wholemeal atta, and resulting atta, after a prohibition on the export of wheat grain.

Government stated that the move was made with the purpose to manage the overall food security of the country as well as meeting the needs of the neighbouring and other vulnerable countries.

In a written reply to Lok Sabha during the recent Parliament session, Union Agriculture Minister Narendra Singh Tomar said: “As on 01.07.2022, the actual stock of wheat is 285.10 Lakh Metric Tons (LMT) against the Buffer norm of 275.80 LMT.”

The minister confirmed in response to a different inquiry about whether it is accurate that the amount of wheat purchased directly from farmers has decreased as private procurement has increased.

“The procurement of wheat has fallen due to higher purchase of wheat by traders as the market price of wheat had shot up due to prevailing international geopolitical situation,” the Union Minister said.

“Moreover, if the farmer gets better price in comparison to MSP, they are free to sell their produce in the open market.”

Given that farmers are already receiving higher prices for their produce from private buyers, wheat price increases over MSP simply indicate that the Center had to purchase less tonnes under the price guarantee programme.