Stock Limit On Wheat After 15 Years To Check Rising Prices, Hoarding

For the first time in 15 years, the government on Monday imposed stock limits on wheat with immediate effect till March 2024 in a bid to check hoarding and contain rising prices of the key commodity.

The government also decided to offload 15 lakh tonnes of wheat to bulk consumers and traders from the central pool from month-end under the Open Market Sale Scheme (OMSS). Apart from wheat, rice will be offloaded to bulk buyers under the OMSS and the quantity will be decided in due course of time.

The government made it clear that it has no plans to tweak the wheat import policy as the country has ample stock. It further said the ban on wheat export would continue and further export of sugar will be not permitted as of now.

The stock limit on wheat has been imposed until March 2024 just before the commencement of General Elections to control prices. Last time, the stock limit was imposed in 2008.

Briefing the media, Food Secretary Sanjeev Chopra said the stock limit has been imposed on wheat because some "unscrupulous elements are holding the stock and creating artificial scarcity" driving mandi prices up by almost 8 per cent in the past month.

"The wholesale and retail prices have not gone up to that much. With the lag, we expect the wholesale and retail prices will also go up as modal mandi prices are showing upswing. The government has imposed stock limit on wheat...," he said.

Wheat prices in mandi rose to Rs 2,302 per quintal on June 7 from Rs 2,129 per quintal a month before.

A stock holding limit of 3,000 tonnes has been imposed on wheat traders/wholesalers; 10 tonnes on retailers, 10 tonnes for each outlet of big chain retailer and 3,000 tonnes at all their depots. In the case of processors, 75 per cent of annual installed capacity, he said.

They have been directed to declare the stock position and update them regularly on the portal of the Department of Food and Public Distribution.

In case, the stocks held by them are higher than the prescribed limit, then they have to bring the same to the prescribed stock limits within 30 days of the issue of this notification.

To improve domestic availability and check prices, Additional Secretary of the Food Ministry Subhod Kumar Singh said the government has decided to offload both wheat and rice under the OMSS to bulk buyers and traders.

About 15 lakh tonnes of wheat from the central pool stock will be offloaded in the first phase to bulk buyers, flour mills, private traders and manufacturers of wheat products through e-auction. The lot size will be 10-100 tonnes per entity, he said.

"The registration process for e-auction has been opened by the state-run Food Corporation of India (FCI). Wheat auction will start from month-end," he said.

In case of rice sale under OMSS, the quantity will be decided in due course of time.

The reserve price of wheat has been fixed at Rs 2,150 per quintal for Fair and Average Quality (FAQ) grain and Rs 2,125 per quintal for under relaxed specifications (URS) and applicable till December 31.

Whereas the reserve price of rice has been fixed at Rs 3,100 per quintal for private parties and the rate is applicable up to October 31, he added.

Citing reasons for selling rice via OMSS, the Secretary said there has been 10 per cent increase in prices in the last year. "We assume in sinc with wheat, some people may link with rice and this is just the signal we are giving to the market and I think public stock holding everyone is aware. We will dispose so that prices are tapered."

Asked if the stock limit on wheat was imposed to shield the market from the price rise crisis before the Lok Sabha polls, the Secretary said, "Wheat starts coming to the market from April 1. Once it comes to market, there is no need to impose stock limits. But we did it now and imposed until March 31. From April 1 (2024), new crop will come and at that time we presume there is no requirement of stock limit."

When asked how the stock limit on wheat will improve local availability when the same imposed on edible oils failed, the Secretary said: "When there are no stocks and you impose the limit, then it will not come to the market. When the stock availability is there with the government and private sector, these limits we hope will have much more effect in controlling the prices."

On reducing wheat import duty, he said there are no plans to tweak the policy as the country has enough supplies and even the ban on wheat exports would continue.

"FCI has wheat stock of over and above the buffer stock norm. Farmers and traders are also holding the stock. There is enough stock of wheat in the country. It is only that there are unscrupulous elements holding the stock and creating artificial scarcity. Only for that purpose, the stock limits have been imposed," he said.

The Secretary further said, "We are not looking at import as the country has enough stock available in the country, both with FCI and private. There is no requirement for imports at this juncture. There is no need to look at import duty."

He said the domestic wheat production is estimated to be a record 112 million tonnes in 2022-23 crop year as per the third estimate of the agriculture ministry.

"With 112 million tonnes, we have ample availability of stock. A lot of stock has been hoarded by traders and even the farmers are not releasing the stock thinking the rates will go up. That's why imposing stock limits makes sense at this juncture," he said when asked about the accuracy of the production estimate of wheat.

The Additional Secretary also mentioned that considering private estimate of wheat, production to be higher by 5 million tonnes from last year. "We have 5 million tonnes extra production and since export is not happening, that stock is available in the country."

Asked if the government took measures keeping in mind the possible monsoon failure this year, the Secretary said: "Monsoon is delayed. We are still expecting it will be normal. Only time will tell."

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)