High Wheat Prices in India Ahead of Festive Season
Wheat prices in India reached a six-month high recently due to reduced supply and increased demand before the festive season. The central government banned wheat exports to control prices, but results were limited. With upcoming elections, there might be a reduction in import duties on food grains to control prices.
Rising Prices in Indore
In Madhya Pradesh’s Indore, wheat prices rose by 1.5 percent to Rs 25,446 ($307.33) per metric ton. This is the highest price in six months and the highest since February 10 this year. Prices have gone up around 18 percent in the last four months. The lower supply and higher demand before the festival season are causing this rapid price increase.
Supply Shortage in Delhi and Government Actions
Delhi traders noted that wheat supply from key states stopped, leading to insufficient wheat in the market. This situation could cause food inflation and impact the central government. To address this, the government is urging the release of wheat stored in cold storage. As of August 1, the government holds 28.3 million metric tons of wheat stocks, an increase from last year. Import tax on wheat might be reduced or abolished to stabilize prices.
Wheat Production and Demand
Despite high wheat production of 108 million metric tons last year, demand remains around 108 million metric tons annually. This year’s production is 10 percent less, leading to concerns. India is the world’s second-largest wheat producer.
Ban on Export since May 2022
Due to limited availability and sudden price increases, the Indian government banned wheat exports in May 2022. Unseasonal rains damaged crops, prompting relaxed quality norms for wheat procurement. Farmers in Punjab, Haryana, Rajasthan, and Chandigarh received exemptions due to crop damage from stagnant water. The government’s decision aimed to address farmers’ demands and manage the situation.