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In Short:

Despite a record harvest of wheat, lower production in some states is causing prices to rise. This might lead India to allow wheat imports, currently banned. Public stocks are falling short of target due to farmers selling to private traders for higher prices. Retail wheat prices are currently up 6.5% year-on-year, but may increase further in the coming months.

The Wheat Price Puzzle: A Peek into India’s Harvest Scenario

Despite a bountiful harvest, **wheat** prices are on the rise in India. What’s causing this strange phenomenon where plenty doesn’t equal affordability? Let’s dive in and unravel the mystery with a human perspective.

How is the wheat harvest this year?

The agriculture ministry projected a record harvest of 112 million tonnes (mt) in 2024, barely above the 2021 crop of 110 mt. Climate variations in 2022 and 2023, such as heatwaves and untimely rains, impacted production. While this year’s harvest was affected in states like Madhya Pradesh due to a warmer winter. As per consumer affairs data, wholesale wheat prices are up by 5.3% year-on-year, with consumer prices rising by 6.5%.

What about public stocks?

Government agencies aim to purchase wheat to supply to beneficiaries, maintain strategic reserves, and stabilize market prices. However, as of 24 May, only 26 mt had been purchased, slightly below the annual target. This shortfall is mainly due to lower procurement in states like Madhya Pradesh, where farmers opt to sell to private traders offering better prices for premium varieties.

Will India be pushed into allowing wheat imports?

The decision on wheat imports depends on buffer stocks and price trends in the future. While imports are currently banned, there’s a forecast of India needing to import 2 mt of wheat due to rising demand, depleting stocks, and weak global prices. If the need arises, it would be the first time in six years.

What about farmer prices?

Farmers receive a minimum support price (MSP) of ₹2,275 per quintal from the government, but market prices for premium wheat varieties go as high as ₹3,200 per quintal. States like Madhya Pradesh and Rajasthan are offering an additional bonus of ₹125 per quintal, encouraging farmers to hold onto their produce for better prices.

How are retail food prices moving?

Retail wheat inflation stands at 6.5%, relatively lower compared to other essentials like rice, tur dal, and vegetables. Despite moderate price increases during the harvest season, the looming scarcity could lead to a further rise in wheat prices in the months ahead.

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