India to Release Wheat from State Reserves to Boost Supplies for Flour Mills and Biscuit Makers

In an effort to keep a lid on local wheat prices, the Indian government has decided to sell wheat from its state reserves to bulk consumers such as flour millers and biscuit makers starting next month.

According to a government order seen by Reuters, the state-run Food Corporation of India (FCI) has been allowed to start offering wheat from its inventories at 23,250 rupees ($279) per ton, nearly 12% lower than the prevailing open market prices.

The move is aimed at boosting wheat supplies in the domestic market, as India has faced a sharp rise in wheat prices after a heatwave shriveled the crop in 2022 and 2023, leading to a 6.25% drop in this year’s production compared to the government’s initial estimate of 112 million metric tons.

Wheat stocks in state warehouses have also dropped to 29.9 million metric tons as of June 1, compared to 31.4 million last year. This has prompted the government to consider allowing wheat imports after a six-year gap to replenish depleted reserves and control rising prices.

The government has also imposed limits on the wheat stocks that traders can hold, and is considering reducing or removing the 40% import tax on wheat to enable private traders and flour millers to buy from major exporters like Russia and Australia.

By offering wheat from its state reserves at a discounted price to bulk consumers like flour mills and biscuit makers, the government hopes to increase the availability of wheat in the domestic market and exert downward pressure on prices.

FCI is yet to decide on the exact quantity of wheat it plans to sell on the open market, but last year it sold a record over 10 million metric tons from its inventories to private players.

The move is expected to be welcomed by private players, who will be able to access wheat at an attractive price from the state reserves, helping them meet their requirements.

India to Release Wheat from State Reserves to Boost Supplies for Flour Mills and Biscuit Makers
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