Govt to sell extra 7 mt wheat to rein in price rise

The government plans to sell an additional 7 million tonnes (mt) of wheat to bulk consumers and flour mill owners in the next few months to counter rising prices of wheat flour across the country.

This would be over the already allocated 3mt of wheat for sale in the open market. The wheat would be sold in small lots of around 2-2.5mt each month, with an option to carry forward the unsold stocks

A senior official in the Union food ministry said that final modalities for the release of an extra 7mt of wheat is being worked out. If approved, then the government would have allocated a total of 10mt of wheat in the open market this financial year.

He said the step would not only help in easing the bulging grain stocks ahead of rice procurement season, but would also ensure that traders do not divert the wheat meant for domestic consumption towards exports. India’s wheat stocks as on September 1 were estimated at 46.2mt, about 230 per cent more than the requirement.

Overall foodgrain stocks (also comprising rice and coarse cereals) were estimated at 71.9mt, much more than the required 21.2mt. “Of the already allocated 3mt of wheat for sale to bulk consumers and flour, 2.3mt has already been released,” the official said, adding that in the coming weeks more quantities would be released.

Market players said the government might sell wheat at Rs 1,285 plus taxes in wheat growing states and Rs 1,285, besides transportation costs in non-wheat producing states.

The minimum support price (MSP) of wheat is Rs 1,285 per quintal for 2012-2013 crop marketing season. Friday, food and consumer affairs minister K V Thomas blamed cartelisation by a section of wheat flour traders and millers for the sharp rise in prices in retail markets.

"When I am giving wheat at a subsidised rate, they (flour millers) should reduce the atta (flour) price. Have they reduced the price? They have not. They have cartelised," Thomas told reporters on the sidelines of an event in Kochi.

According to the department of consumer affairs data, price of wheat flour in the retail markets has increased on an average by Rs 2-4 per kilogram in the last month.

The increase has been maximum in Nagpur and Port Blair where wheat flour prices have surged by Rs 6 per kg and Rs 7 per kilogram in the span of just one month.

In the last three months, flour prices have surged by staggering Rs 5-15 per kilogram across the country. This has come despite a bumper harvest of around 94 million tonnes of wheat in 2011-2012.