Govt eyes stern steps to check food prices

India has ample wheat for federally run welfare programmes but speculative trading has pushed up cereal prices, prompting the government to consider measures, such as disclosure of stocks by private traders, a senior official said.

The Union government is watching price and stock movements closely and even with lower output this year, there should be not be a supply-demand mismatch because harvests have been adequate to meet domestic requirements until the next crop, food secretary Sudhanshu Pandey said.

The government is considering price-control measures, such as asking traders to declare their available wheat stocks, and a crackdown on hoarding of grains, he said.

“The Food Corporation of India has 24 million tonnes of wheat. There is no shortage for welfare schemes and for domestic consumption. Prices are rising because of speculative trading,” Pandey said.

The government will take steps to ensure stocks are released into markets, he added. The government could even impose limits on how much reserves traders can hold to increase availability in the open market.

A prolonged heatwave in March trimmed India’s wheat output, which is now estimated to be 106.8 million tonnes, a three-year low. Output in the previous year (2020-21) was 109.6 million tonnes.

The country banned wheat exports in May to boost domestic availability. In 2021-22, India shipped 7.2 million tonnes for overseas sales. In 2022-23, until the ban was invoked, the country exported 4.5 million tonnes.

“Prices have risen since March. Because the export market was good, farmers got prices that were above the minimum support price,” said Rahul Chauhan of IGrain Private Ltd. Retail wheat (atta) prices have risen to about ₹ 36 a kg from levels of about ₹30-31 kg in January.

A robust export market had meant that the government bought lower quantities of wheat for federal reserves this year. Under the public distribution system, the government provides inexpensive grain to nearly 800 million people at ₹ 2-3 per kg.

A late revival of the monsoon augurs well for the upcoming rabi or winter-sown season. “Reservoir levels will buffer up rabi prospects. Hence, the foodgrains production target of 328 million tonnes for 2022-23 – only 4 % above last year’s output – appears to be in striking range,” the Reserve Bank of India said in a report last week.