Unlocking Wheat Market Potential Overcoming Challenges and Ensuring Stability in India

The wheat market is currently facing a lack of clear direction in government policies, leading to concerns among stakeholders in India. This uncertainty has contributed to continuous increases in wheat prices. There is growing speculation about possible insider activities influencing these market dynamics, which further fuels price hikes.

To address the mounting surge in wheat prices, it is imperative for the government to consider import concessions. One solution is offering import concessions to flour mills and traders on the condition that they commit to exporting wheat. This approach could help maintain the supply chain, ensuring that flour mills receive an adequate wheat supply and mitigating the current shortages. Importing and re-exporting wheat as a valuable commodity could benefit all parties involved.

Presently, wheat prices are on the rise in Uttar Pradesh, with warehouse prices in Madhya Pradesh at approximately $0,31 per kg. There is potential for a three to five percent increase, which translates to around $0,012 per kg.The government has refrained from reducing wheat import duties for the next month, anticipating changes in November. This cautious approach aims to avoid market instability during the critical sowing period for farmers.

The government presently sells approximately 0.15 to 0.2 million tonnes of wheat each week through the Food Corporation of India (FCI). Each buyer is allocated 100 tonnes of wheat. Despite FCI offering a discount of $0,06 to $0,072 per kg compared to market prices, these savings do not reach ordinary consumers, who continue to pay higher prices.Distributing this discounted wheat results in the government providing a bonus of $1.20 billion every week to industries and mills, but the benefit of this largesse does not trickle down to the public.

The government’s estimates appear to be flawed, and while there has been a recent adjustment, some errors persist in the government’s estimation. As for the future, there is an expectation that the government may increase the amount of FCI wheat sold from the current 100 tonnes to 200 tonnes or even 300 tonnes. This step could help address market concerns and stabilize prices.In conclusion, wheat prices continue to surge, driven by various factors, including government policies and market dynamics. These challenges necessitate swift and comprehensive actions to ensure that wheat remains accessible and affordable to the public while supporting the interests of various stakeholders.