Despite a record output projection of 112 million tonnes, the government has set a cautious aim for wheat procurement of 30-31 million tonnes.
Official data indicates that farmers in states like Punjab and Haryana have postponed harvesting due to higher moisture content in their grains caused by recent rainy spells, which has resulted in a decrease in the amount of wheat purchased by the Union government through markets.
Despite a record output projection of 112 million tonnes, the government has set a cautious aim for wheat procurement of 30-31 million tonnes. Compared to last year’s actual acquisition of 26.2 million tonnes, the aim is almost 19% higher.
In order to enable the second-largest wheat producer in the world to restore depleted stocks—which, at roughly 10 million tonnes today, have hit a 16-year low—sufficient procurement is needed this year. The abundance of state-owned inventories will also lower the recently raised price of wheat, hence increasing food inflation overall.
As on date, the government has procured about 7.3 million tonnes of the staple, compared to about 11.5 million tonnes during the corresponding period last year, according to data from the Central Food Grains Procurement Portal.
Abhishek Agrawal from Comtrade reports a 38% drop in nationwide wheat arrivals to 9M tonnes year-on-year due to delayed harvesting caused by increased moisture content.
A food ministry official, preferring anonymity, expresses confidence that the government will achieve its wheat procurement target as arrivals are on the rise.
Government stocks have declined after selling nearly 10 million tonnes to bulk buyers like flour mills since June last year, aiming to control domestic prices.
Wheat inflation in the world’s second-largest grower surged to record highs post-Ukraine war but has eased to about 5% annually due to the government’s aggressive supply-side measures.
Despite consecutive seasons of lower output due to extreme weather, the government has refrained from wheat imports, subject to a 40% duty currently.
The food ministry stated earlier this month that it planned to purchase 30-32 million tons of inventories that are owned by the public. “Approximately 23 million tonnes are needed overall for food security goals and all welfare programs,” an official stated. The term “procurement” describes how the government buys food grains at minimum support prices from farmers.
For the past two years, the government has fallen short of its procurement targets. Against a target of 34.15 million tonnes, the Food Corporation of India was only able to purchase 26.2 million tonnes in the 2023–24 crop year. Against a target of 44.4 metric tons, the government’s purchases of wheat in the 2022–2023 season fell to 18.8 million tonnes.
Despite a restriction on wheat exports, prices have remained above minimum support levels for the past two years, which has led farmers to prefer selling to private traders.
In an effort to increase local supply, the government banned the export of rice, wheat, and onions due to the high rate of food inflation. In a move to keep prices under control, particularly for cereals, the Union government has increased production of essential staples under its subsidized Bharat brand to reach customers directly.
Fuel prices declined, causing India’s retail inflation to drop to 4.85% in March, a 10-month low. Food inflation hasn’t decreased, though. Inflation on cereals increased by 8.4% as opposed to 7.6% in February. Severe weather and heat waves in 2022 and 2023 reduced wheat production by 2.8–3%, which fueled a price spiral. The Department of Consumer Affairs reports that the retail price of atta, or average wheat flour, in India was ₹35.9 kg, up 3.7% annually from the previous year.
