Government Intervention Brings Relief to Wheat Prices

The Indian government’s decision to boost wheat allocations under the Open Market Sale Scheme (OMSS) has helped stabilize wholesale prices over the past ten days. The weekly auction quantity increased from 0.15 million tonnes to 0.3 million tonnes, allowing processors to access more grain at lower prices. However, wheat prices remain above the Minimum Support Price (MSP) of USD 0,29 per kg for the current season.

Wheat procurement for buffer stocks will begin next month in some states and April 1 in others. Unless market prices fall closer to the MSP, the government may struggle to meet its procurement targets. Private traders dominate wheat purchases in Madhya Pradesh and Uttar Pradesh due to lower mandi fees compared to Haryana and Punjab.

Wheat Average Prices In India

The All-India average wholesale price of wheat dropped to USD 0,35 per kg on February 10, down from USD 0,36 per kg on February 1. However, prices remain higher than USD 0,35 per kg a month ago and USD 0,33 per kg a year ago. The price trend in Uttar Pradesh, Madhya Pradesh, and Rajasthan follows a similar pattern.

The government remains confident about wheat procurement. In 2023-24, despite 17% inflation just before harvest, wheat procurement increased by 40%.

Since December 2024, the Food Corporation of India (FCI) has sold 1.3 million tonnes of wheat through OMSS e-auctions. With increased weekly allocations, the government hopes to improve procurement efficiency.

Future Procurement Plans

Union Food Minister Pralhad Joshi has discussed strategies with food ministers from Uttar Pradesh, Madhya Pradesh, Bihar, Gujarat, and Rajasthan to boost procurement. Additionally, Union Food Secretary Sanjeev Chopra will soon meet officials from wheat-growing states to finalize procurement targets.

In 2023, the government purchased 2.66 million tonnes of wheat, with 26% sourced from the five key states. The 2024 procurement target for these states was 1.62 million tonnes, but the government could secure only 0.7 million tonnes (43% of the target).

For 2024-25, India’s wheat production target is 115 million tonnes, up from 113.29 million tonnes in 2023-24. The agriculture ministry will release an official production estimate next month.

Conclusion: Stable Prices Expected with Increased Supply

With higher OMSS allocations and government-led procurement strategies, wheat prices should stabilize in the coming months. However, the government must monitor market trends closely and adjust procurement policies to maintain adequate buffer stock levels and fair prices for farmers.

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