India has reached out to both global and domestic trade entities, urging them to abstain from acquiring new-season wheat from local farmers. This call aims to support the Food Corporation of India (FCI) in procuring substantial quantities to fortify its diminishing reserves, as per insider sources.
As the world’s second-largest wheat consumer and grower following China, India imposed an export ban in 2022 and is now focused on enhancing its stocks and stabilizing prices that surged due to adverse weather conditions impacting output in 2022 and 2023.
Escalating wheat prices compelled the government to release record amounts to enhance local supplies, resulting in a depletion of reserves crucial for sustaining the world’s most extensive food welfare program, benefitting nearly 800 million individuals with free grain.
Traders and government sources, speaking on condition of anonymity due to lack of authorization, disclosed that the government has advised private traders to refrain from participating in wholesale markets where farmers typically sell their produce to FCI or private traders. This informal directive, the first since 2007, suggests avoiding wheat purchases at least throughout April, with wheat procurement tapering off post mid-May.
In a bid to secure at least 30 million metric tons this year, the government has instructed top wheat-producing states to ensure that private traders do not obstruct FCI’s procurement plans. Compliance with this directive is expected among most traders to prevent potential restrictions on wheat holdings and to deter hoarding practices.
Furthermore, New Delhi has mandated traders, major retailers, and food processors to declare their wheat stocks weekly starting from April to curb hoarding tendencies and price escalations.
Despite lower wheat stocks leading to heightened open market prices, India has refrained from importing wheat to avoid antagonizing farmers, a significant voting bloc. The looming parliamentary election scheduled from April 19 may influence decisions regarding wheat imports, with projections indicating a potential need for 2 million metric tons of grain imports this year.
FCI’s focus on Uttar Pradesh, a key wheat-producing state historically contributing less than 2% to FCI’s procurement, has prompted measures such as withholding freight cars from significant traders in April. Local authorities have been instructed to prevent large-scale wheat purchases by major traders in Uttar Pradesh to support FCI’s procurement efforts.