The government’s decision to ban wheat exports, according to Food Secretary Sudhanshu Pandey, is expected to cool domestic prices in a week or so. The ban has been implemented as the prices of wheat and wheat flour have risen in the past year by up to 19 percent. He said the tight global supply, including a slight fall in wheat output in India, has spiked global prices sharply.
Therefore, the domestic prices of wheat and atta (wheat flour) have also shot up in the last month. The likely fall in wheat output in India and even in the government’s procurement will not likely affect the public distribution system (PDS), he said and asserted, “PDS will be run smoothly.”
On 13th May’22, the Commerce Ministry imposed a ban on wheat exports with immediate effect. However, it has allowed wheat shipments with valid irrevocable letters of credit (LoC) issued on or before the date of the notification.
The country has contracted for the export of 4.5 million tonnes of wheat so far this fiscal. As per the official data, 1.46 million tonnes were exported in April, as per the official data.
Global demand was rising, and different countries were putting restrictions on it. Sentiments were driving prices. And international wheat prices have been going up. In this backdrop, wheat from other countries was selling as high as USD 420-480 per tonne, so in this context, India had to impose curbs on wheat exports to keep a check on rising domestic prices and protect the interests of consumers.
The decision will definitely help in softening the prices. However, it will not be possible to predict how much prices will fall. But domestic prices will no doubt cool down in a week or so.
The daily average retail price of wheat has increased by 19.34 per cent to Rs. 29.49 per kg on May 9, compared with Rs 24.71 per kg in the year-ago period. Similarly, retail atta prices have shot up by 14.27 per cent to Rs. 32.91 per kg from Rs. 28.8 per kg in the comparable period.
In the wholesale market too, the daily average price of wheat rose 21.55 per cent to Rs. 25.82 per kg on May 9 compared with Rs. 21.24 per kg in the year-ago period, while atta prices rose 15.88 per cent to Rs. 27.89 per kg from Rs. 24.06 per kg in the comparable period.
The maximum increase in retail atta prices was 33 per cent in a year seen in the southern zone, followed by the eastern zone at 12.08 per cent, the western zone at 10.74 per cent and the northern zone at 8.29 per cent in the last one year.
According to Commerce Secretary B V R Subrahmanyam, “There has been a sudden spike in wheat and atta prices in the country.” The regional spike is quite dramatic and it has gone up to 36-38 per cent. ” He also said that there is no dramatic fall in production and there is no need to imagine a “crisis”.
There are adequate food grains available both in government stock and in public and private stock. Food consumption is an inelastic item. You can never have a sudden increase or decrease in consumption.
The production figures, even after a small drop in yield, especially in Punjab and Haryana, are 105-106 million tonnes. India’s wheat production has been revised lower to 105-106 million tonnes for the 2022-23 crop years (July-June) from an earlier estimate of 111 million tonnes due to the heat wave, especially in north-western India.
Even the government’s wheat procurement is expected to be lower at 18.5 million tonnes from the earlier estimate of 19.5 million tonnes and the initial target of 44.4 million tonnes for the current year, according to the Food Ministry. So far, about 18 million tonnes of wheat have been procured by the Food Corporation of India (FCI) and state agencies.