The government has approved the sale of wheat and rice in the open market for bulk buyers from buffer stocks starting next month, aiming to improve domestic supplies and prevent a rise in the prices of these two staple cereals in the coming months. The Food Ministry has instructed the Food Corporation of India (FCI) to start offloading wheat and rice at prices excluding transportation costs, set at ₹2325/quintal and ₹2800/quintal respectively, from August 01. The price for wheat is lower than its current market price of ₹2400/quintal.
According to an official note, the exact quantity of grain stocks to be offloaded will be determined by FCI in consultation with the ministry, after maintaining the necessary stock for the public distribution system, buffer norms, and an additional quantity of 2 million tons. Last year, FCI began open market sales operations in June and offloaded a record 10 million tons for bulk purchasers in FY24. Wheat inflation was at 6.53% year-on-year in May, and due to record open market sales of wheat from FCI stocks, inflation has remained in single digits since August 2023. As of Tuesday, FCI holds 28.04 million tons of wheat stock, against a buffer stock requirement of 27.58 million tons for July 1.
The case of rice, the government effectively has a large surplus of more than 47.49 million tons, compared to a buffer requirement of 13.54 million tons for July 1. The government's initiative to offload rice to bulk buyers through weekly e-auctions did not receive a positive response from the trade.
Officials mentioned that measures would be needed to offload a significant amount of rice from the buffer, including supplying it to states before the new paddy procurement season begins on October 1. Last month, the government imposed stock holding limits on wheat for retailers, wholesalers, processors, and large-chain retailers until March 31, 2025.
Wheat Supply and Export Ban: Sanjeev Chopra, Secretary of the Department of Food and Public Distribution, stated last month that there is no shortage of wheat in the country, and the move to impose stock holding limits would help improve supplies. Chopra ruled out lifting the export ban on wheat, which was imposed in May 2022. According to the Agriculture Ministry, wheat output in the 2023-24 crop year (July-June) is estimated at 112.92 million tons.
Decline in Urad Prices: Meanwhile, the Department of Consumer Affairs reported on Wednesday that wholesale prices of urad have declined by 3.12% in Indore and 1.08% in Delhi compared to the previous week, attributed to robust kharif sowing and imports. "In alignment with domestic prices, the landed prices of imported urad are also on a declining trend," according to an official statement.
Due to adequate monsoon rains so far, urad sowing in Madhya Pradesh, Andhra Pradesh, Uttar Pradesh, Rajasthan, Tamil Nadu, and Maharashtra has reached 0.53 million hectares (MH) by July 5, compared to 0.36 MH in the corresponding period last year. Agencies like farmers' cooperative NAFED and the National Cooperative Consumers' Federation of India have started pre-registration of farmers for urad procurement. Retail inflation in urad was 14.06% year-on-year in May, with prices remaining in double digits since November 2023.
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