Wheat Prices Stabilize After Restrictions on Exports

As a result of the central government's prompt implementation of a number of policy interventions on the exports of the foodgrain, wholesale prices of wheat in the domestic mandis have declined from their all-time highs and have stabilized.

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 crisis in Ukraine. As recently produced rabi harvests enter the mandis, or physical marketplaces, wheat prices often stay on the lower side at this time of year.

Crop productivity was impacted this year by repeated heat waves that hit major wheat-growing districts in India before the rabi harvest.

The present price of wheat in India is much higher than the Centre's guaranteed Minimum Support price of Rs 2,015 per 100 kg, which is an uncommon occurrence in and of itself.

Wheat export demand increased as the tense situation between Russia and Ukraine escalated into a full-fledged conflict, leading to record-high wheat prices in the local mandis.

In Indore, wheat is now being sold for little less than Rs 2,400 per 100 kg. Wheat prices have also decreased considerably in other markets.

"Based on the present trend, it seems that the foodgrain price would drop around Rs 2,300 in the next few days," said senior merchant NK Agarwal of Indore.

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 requirements of vulnerable neighbors and other nations.

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

According to a recent prediction from the US Department of Agriculture, wheat output in Ukraine is anticipated to fall 13.5 million tonnes, or 41%, from the season 2022–2023 to around 19.5 million tonnes.

The Indian government went beyond just 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.

The administration declared that the restriction on wheat exports was implemented to manage the nation's overall food security as well as to address the requirements of the neighboring and other vulnerable nations.

According to recent official statements, there is enough wheat stock in the central pool. Union Agriculture Minister Narendra Singh Tomar said in a written response to Lok Sabha during the most recent session of Parliament: "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 concurred 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 Union Minister said that "the procurement of wheat has declined owing to increasing wheat purchases by traders as the market price of wheat has gone up due to the existing worldwide geopolitical environment."

Additionally, the farmer is allowed to sell their goods on the open market if the price is higher than the MSP.

Given that farmers are already receiving higher prices for their grain from private purchasers, wheat price increases above MSP simply indicate that the Center had to acquire less quantities under the price guarantee scheme.