OMSS Delays Fueling Wheat Price Surge in India: What’s Happening?

Wheat prices in India are climbing to alarming levels, especially in the South, where they’ve soared to ₹34,000 per tonne. As wheat prices rise rapidly, flour mills and traders are urging the government to start the OMSS this fiscal year or allow duty-reduced wheat imports to stabilize the market.

Why Are Wheat Prices Rising?

The scarcity of wheat is a major driver behind the surge in prices. Uttar Pradesh now supplies most of the wheat, as stocks remain low in other major producing states like Rajasthan, Madhya Pradesh, Haryana, and Punjab. In Delhi, prices have surged to ₹3,200 per quintal—a steep increase from recent months.

"The supply-demand situation is tight, and wheat is mainly available through private stockists," explained Rajesh Paharia Jain, a Delhi-based exporter. "It’s tough to find wheat in many regions."

OMSS Delays and Government’s Role in Price Hike

Frustration is growing in the trade community as the government delays resuming the Open Market Sale Scheme (OMSS) this year. The Food Ministry’s reluctance to allow wheat imports, despite the price surge, has raised questions about its strategy. Agmarket data shows the average wheat price at Agricultural Produce Marketing Committee (APMC) yards at ₹2,811 per quintal, well above this year’s Minimum Support Price (MSP) of ₹2,275.

Retail wheat prices have also risen. The Ministry of Consumer Affairs reports a 2.2% increase in the last month and a 4.44% rise year-on-year, with the average price now at ₹31.98 per kilogram. In response to the shortage, the government plans to release more wheat through the Public Distribution System (PDS) rather than OMSS. Many see this as a political move, especially in states like Tamil Nadu, where rising PDS demand for wheat is replacing rice.

Wheat Production Estimates Under Scrutiny

The government’s wheat production estimate for this year is a record 113.29 million tonnes, but many experts believe this forecast is too optimistic. "The government may have misjudged the wheat harvest size. The bumper crop it expected hasn’t materialized," said Jain.

Logistical issues have also contributed to the price hike. Wheat from Uttar Pradesh is reaching southern cities like Coimbatore and Chennai at ₹3,400 per quintal, once transportation costs are included.

The Debate Over Wheat Imports

The delay in launching OMSS and the government's stock limits are raising concerns in the wheat market. "The government promised to release more wheat during the festival season, but nothing has happened," one source said. "If OMSS is off the table, the government should allow 3-4 million tonnes of wheat imports at a reduced duty to balance the market."

However, there is reluctance to allow imports, as it may interfere with the sowing of the rabi (winter) wheat crop, crucial for the country’s food security. If the government removes the import duty, experts expect the landed price of imported wheat to be around ₹32,000 per tonne, factoring in the 40% duty and other levies.

Global Wheat Prices vs. Domestic Surges

International wheat prices are currently lower than domestic prices, making it a good time for India to consider imports. According to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), US Hard Red Winter wheat is priced at USD 0.26 per kilogram, and Australian wheat costs USD 0.38 per kilogram (free-on-board). These global prices are much cheaper than India’s domestic prices.

Countries like Algeria have already secured contracts to import 600,000 tonnes of wheat at USD 0.26 per kilogram for delivery in December from the Black Sea region. Many industry experts believe India is missing the chance to secure cheaper wheat before the next domestic harvest.

What’s the Outlook for Wheat Prices?

Wheat prices continue to rise, and with the next harvest months away, the industry is urging the government to act quickly. Prices are unlikely to stabilize without intervention. If the government does not release wheat through OMSS or allow imports, prices may stay high.

If you're involved in the wheat trade or are a consumer, it may be wise to act soon. Waiting for government action could lead to even higher prices. With several months before the next domestic crop is harvested, it’s important to stay informed about potential policy changes.





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