To control prices, the government imposes a stock limit on wheat until March 2024 and must offload 15 lakh pounds through OMSS

In an effort to prevent stockpiling and control the essential commodity’s growing costs, the government on Monday placed stock limitations on wheat for the first time in 15 years. The restrictions are effective immediately and last through March 2024.

Additionally, the government made the decision to sell 15 lakh tonnes of wheat to merchants and large customers from the central pool starting at month’s end under the Open Market Sale Scheme (OMSS). In addition to wheat, rice will be distributed to bulk customers via the OMSS; the amount will be determined in due order.

The administration made it plain that it has no intentions to change the country’s import restrictions on wheat since the supply is sufficient. It also said that the export prohibition on wheat would remain in effect and that sugar exports would not be allowed moving forward.

To keep prices under control, the stock restriction on wheat was put in place until March 2024, shortly before the start of the general elections. The stock cap was last enforced in 2008.

In a press conference, Food Secretary Sanjeev Chopra said that the wheat stock restriction was put in place because “unscrupulous elements are holding the stock and creating artificial scarcity,” which has caused mandi prices to increase by roughly 8% over the previous month.

Prices at the wholesale and retail levels have not increased much. As modal mandi prices are indicating an uptrend, we anticipate that with the lag, both wholesale and retail prices would increase. Wheat stock limits have been set by the government, he added.

On June 7, wheat prices in Mandi increased to Rs 2,302 per quintal from Rs 2,129 per quintal the previous month.

The limit on stock holding for wheat merchants and wholesalers is 3,000 tonnes, with 10 tonnes for retailers, 10 tonnes for each location of a large chain store, and 3,000 tonnes for all of their depots. 75% of the yearly installed capacity for processors, he said.

They have been told to update the Department of Food and Public Distribution site often with stock updates and declarations.

If the stocks they own are greater than the permitted limit, they must reduce them within 30 days after the publication of this notice to the permitted stock limits.

According to Subhod Kumar Singh, Additional Secretary of the Food Ministry, the government has chosen to sell both wheat and rice under the OMSS to bulk purchasers and dealers in order to increase domestic supply and control pricing.

Approximately 15 lakh tonnes of wheat from the central pool stock would be sold in the first phase via an online auction to bulk purchasers, flour mills, individual dealers, and producers of wheat-based goods. According to him, each entity’s lot will be between 10 and 100 tonnes.

The government-run Food Corporation of India (FCI) has begun the e-auction registration procedure. The wheat auction will begin at the end of the month, he added.

The amount for rice sales under OMSS will be determined in due course.

For grain of Fair and Average Quality (FAQ) and under relaxed standards (URS), the reserve price of wheat has been set at Rs. 2,150 per quintal and is valid until December 31.

While the reserve price of rice for private parties has been set at Rs. 3100 per quintal and is valid up to October 31, he noted.

The Secretary mentioned price increases of 10% over the previous year as justification for selling rice via OMSS. “We presume that some people may equate rice to wheat, and this is merely the signal we are delivering to the market. I believe that everyone who has publicly traded stock is aware of this. Prices will be reduced as a result of our disposal.

When questioned about if the wheat stock restriction was put in place to protect the market from the pricing problem before to the Lok Sabha elections, the secretary said, “Wheat begins going to the market from April 1. There is no need to set stock limitations after it is released to the market. But we completed it right away and made the deadline March 31. A fresh crop will start to be harvested on April 1st, 2024, and we assume that no stock restriction will be necessary at that time.

The Secretary said, “When there are no stocks and you impose the limit, then it will not come to the market,” in response to the question of how the stock limit on wheat would increase local availability given that the identical restriction placed on edible oils failed. These restrictions, we expect, will have a considerably greater impact on price control if stock is available in both the public and private sectors.

He said that there are no intentions to change the policy about lowering the import tariff on wheat since the nation has sufficient supply and even the export prohibition on the grain would remain in place.

“FCI has more wheat on hand than is typical for buffer stocks. Traders and farmers are also the owners of the cattle. Wheat supplies in the nation are adequate. The stock is only being held by dishonest individuals, who are faking a shortage. The stock limitations have only been put in place for that reason, he said.

The Secretary said, “We are not considering imports since the nation has adequate stock available, both with FCI and privately owned. Currently, there is no necessity for imports. Import duties don’t need to be considered.

According to the third estimate from the agricultural ministry, the domestic wheat output is predicted to reach a record 112 million tonnes in the crop year 2022–2023.

“With 112 million tonnes, we have enough of supply available. The dealers have been hoarding a lot of stock, and even the farmers are holding onto their stock because they believe the prices will rise. When questioned about the accuracy of the wheat output projection, he said, “That’s why enforcing stock limitations at this point makes sense.

The Additional Secretary also noted that taking into account a private estimate of a 5 million tonne increase in wheat output from the previous year. Since there is no export, the additional 5 million tonnes of output are accessible domestically.

When questioned about whether the government had taken precautions in light of the potential monsoon failure this year, the Secretary said, “Monsoon is delayed. We continue to anticipate everything to be as usual. Time will only tell.