Govt releases stored wheat to control price rise

The government has started releasing wheat from its own warehouses to quell the price rise in the domestic market.

Following price rises in the international market, Indian wheat is preferred. This has triggered more export from India in the past month. According to official sources, the Food Corporation of India has bought surplus wheat for exports from the major wheat producing states of Rajasthan, Punjab, Haryana and Uttar Pradesh. This is because Indian wheat is available in the global market at a competitive price, even after fetching a premium over the floor price of $228 per tonne, said sources.

In the international market, Australian wheat is available at $350 per tonne, while the Black sea or the Ukranian variety is fetching $300 per tonne. In contrast, the Indian government decided to export wheat at a minimum price (floor price ) of $230 per tonne, which is currently fetching $280-290 a tonne. The rupee depreciation has also helped the suppliers prefer exports over supply to the domestic market.

In the past month, wheat prices rose to Rs 1,350-1,500 a quintal, as against $1,170-1,250 a quintal in the domestic market. Official sources added export is not a worry since the government is laden with stocks in warehouses. “Moreover it is a rabi crop and won’t be much affected by the monsoon”, they said.

In June, an Empowered Group of Ministers had approved the open market sale of 8 million tonne (mt) of wheat, both for bulk sale and the public distribution system. The need to explore the opportunity to export wheat arose after grain stocks in state-run granaries bulged to 71 mt against the available storage space for 66 mt. The stocks are 150 per cent more than the required quantity, officials said.

In July, the Cabinet Committee on Economic Affairs approved export of 2 mt wheat from the government stock at a floor price of $228 (about Rs 12,400) a tonne. The last time the government had exported wheat from the Food Corporation of India’s reserves was in 2004-05.

While it has been decided to immediately allow export of 90,000 tonnes of wheat through bids received by a public trading firm in its recent tender, a committee headed by the commerce secretary has been set up for exporting the remaining quantity.