Taking a serious view of the 10 per cent surge in wheat prices since June-end, the Centre is considering various measures to bring down the prices—from releasing the cereal under the open market sale scheme (OMSS) for user industries to lowering the import duty to zero.

In a meeting with representatives of the Roller Flour Mills Federation of India(RFMFI), Food Ministry officials said the Centre is closely monitoring the availability of wheat for consumers and user industries, besides keeping an eye on its price movements.

Up over ₹300 a quintal

Officials of the Food Ministry told representatives of Roller Flour Mills Federation of India that the government “knows the tools to control price rise and will take a call if the problem of availability and price rise beyond a price range persists in the coming days”.

A statement from RFMFI said Anjani Agarwal, the federation president, told Food Secretary Sudhanshu Pandey that wheat prices have increased by ₹300-350 a quintal in the past fortnight. “There is still uncertainty over the stabilisation of prices,” the statement quoted Agarwal as telling the Food Secretary. 

Millers were buying wheat at ₹2,400-2,500 a quintal in major growing areas, while in other regions they are having to pay ₹2,750-2,850. The situation is abnormal as there are still eight months to go for the next harvest, Agarwal pointed out, adding that big traders and multinationals have cornered huge stocks. 

Ample central stocks

He also urged the Centre to take steps so that the situation does not go out of control.

In response, Pandey assured the delegation that the Centre will control prices on the one hand and ensure smooth availability on the other, the statement said. He told the delegation that the Centre currently has 26 million tonnes (mt) of wheat as stocks in the Central pool. The stocks were more than the government requirement to distribute the foodgrain under welfare measures and maintain buffer stocks. 

On its part, RFMFI urged the Centre to release a sufficient quantity of wheat under OMSS to rein in the market and reduce the wheat import duty to zero from the current 40 per cent.

Both sides agreed that stockists, traders and millers could voluntarily declare the wheat stocks they hold regularly. They agreed to review the situation after a fortnight, the statement said. 

 Export demand

According to Agmarket data, the net weighted average modal price (the rate at which most trades take place) of wheat has increased by 3 per cent to ₹2,260 a quintal currently from ₹2,176 a quintal on July 25. At the end of June, the price was ₹2,050.  Arrivals continue to be below 60,000 tonnes nationally.  

Data from the Consumer Affairs Ministry show that retail prices of wheat have increased by 2.21 per cent month-on-month to ₹30.47 a kg now, while wheat flour(atta) prices have increased by 2.8 per cent to ₹34.85 a kg.

Wheat prices have been ruling higher than normal even before the foodgrain could be harvested this year due to export demand as its supplies in the global market were hit by the Russian-Ukraine conflict. Both nations account for 30 per cent of world trade.

Heatwave impact

In addition, Indian wheat production was affected by a heatwave that swept across the country in March-April and the Food Corporation of India was able to procure only 18.9 million tonnes of wheat from farmers, down by 57 per cent compared with last year.

All this resulted in wheat exporters and traders stocking up a huge volume of wheat but the Centre’s ban on the cereal’s exports from May 13 caught them unawares. However, they are holding on to the stocks looking for prices to rise further, trade sources said. 

On the Chicago Board of Trade, benchmark wheat futures have dropped 4.6 per cent in the past month to $7.6 a bushel ($282.55 a tonne) mainly on account of an UN-sponsored deal between Ukraine and Russia to ship wheat in the Black Sea region. According to the International Grains Council, in the spot market, US Soft Red Winter wheat is quoted at $323 a tonne free-on-board and EU French Grade wheat at $350. Argentine wheat is quoted at $410 and US Hard Red Winter wheat at $368.

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