India's Wheat Prices Decrease Following Modi's Release of Grain to Flour Millers
- 31-Jan-2023 4:45 PM
- Journalist: Jacob Kutchner
NEW DELHI [India]: Indian wheat prices have dropped 13% from their record highs following the government's offer last week of 3 million tonnes to bulk buyers such as flour millers. Prime Minister Narendra Modi gave permission to flour millers to acquire up to 3 million tonnes of wheat from state reserves, which has resulted in a decrease of Wheat prices across India - the biggest consumer of wheat after China.
Wheat prices in New Delhi dropped Monday to 28,290 rupees ($347.11) a tonne - a 13% decline from the record-high mark last week. Stocks being low is the reason behind the drop. Despite that, domestic prices are still up compared to the state-set support price of 21,250 rupees. This spike indicates a sharp decrease in wheat purchases by state authorities last year.
Every year, the government-backed Food Corporation of India (FCI) purchases millions of tonnes of wheat at a fixed support price to uphold the world's largest food welfare program. This is done not only to meet the current needs, but also to create strategic reserves should an emergency arise, like a drought. However, last year FCI's purchases of wheat dropped by an astounding 53% to 18.8 million tonnes due to higher open market prices than what the government pays local farmers.
"We do not want FCI's procurement to drop this year, and that is why we have released 3 million tonnes of wheat," stated a government source.
"If prices drop, FCI will be able to buy reasonably sufficient quantities of wheat from farmers," stated the official.
India's wheat exports saw a rapid increase following the Russian invasion of Ukraine, leading to an increase in local wheat prices. In response, India imposed a ban on exports in May, yet this failed to put the brakes on rising prices within the country.