Government Implements Wheat Stock Limits to Ensure Food Security and Price Stability

Government Implements Wheat Stock Limits to Ensure Food Security and Price Stability

 

1. The government has imposed limits on wheat stocks held by traders, wholesalers, retailers, big chain retailers, and processors.

2. The objective is to manage overall food security and prevent hoarding and speculation, thereby stabilizing wheat prices.

3. Current permissible stock limits: 3,000 metric tonnes for traders/wholesalers, 10 metric tonnes per outlet for retailers and big chain retailers, and 75% of annual installed capacity for processors.

4. Entities must declare and update their stock positions on the Department of Food and Public Distribution's portal.

5. If stock exceeds the limits, a 30-day period is provided to bring it within the prescribed range.

6. The government plans to sell 15 lakh tonnes of wheat from the central pool through the Open Market Sale Scheme (OMSS) via e-auctions to control retail prices.

7. Wheat will be sold in lot sizes of 10 to 100 metric tonnes, with the possibility of additional releases based on demand.

8. The decision to impose limits and sell wheat from the central pool is driven by concerns over lower wheat output due to unseasonal rains, hailstorms, and high temperatures.

9. Lower production leads to higher prices, potentially exceeding the government's purchase prices and impacting supply efforts.

10. As of June 12, wheat procurement fell short of the government's target, highlighting the need for measures to stabilize the market.

 

In response to concerns about the impact of adverse weather conditions on wheat production, the Union Government recently imposed limits on the stock of wheat that can be held by various entities involved in the wheat supply chain. The objective of this measure is to ensure overall food security, prevent hoarding, and curb unscrupulous speculation in order to stabilize the price of wheat by managing its supply. The Department of Food and Public Distribution has stated that there is sufficient stock of wheat in the country.

The current permissible stock limits are as follows: traders/wholesalers can hold up to 3,000 metric tonnes, retailers and big chain retailers can hold up to 10 metric tonnes at each outlet, and processors can stock up to 75% of their annual installed capacity. These entities are required to declare their stock positions and regularly update them on the Department of Food and Public Distribution's portal. If their stock exceeds the prescribed limits, they have 30 days to bring it within the specified limits.

Additionally, the government has decided to release 15 lakh tonnes of wheat from the central pool through the Open Market Sale Scheme (OMSS) to various buyers such as flour mills, private traders, bulk buyers, and manufacturers of wheat products. The aim of this offloading is to control retail prices by increasing the supply of wheat. The wheat will be sold in lot sizes ranging from 10 to 100 metric tonnes. This initial tranche may be followed by more releases depending on prices and demand.

These measures were implemented in light of concerns about lower wheat output resulting from unseasonal rains, hailstorms, and higher temperatures experienced in certain regions. Lower production leads to higher prices, which can exceed the government's purchase prices and impact their efforts to stock up on supplies. The government had set a target of procuring 341.5 lakh metric tonnes of wheat for the Central Pool in the ongoing Rabi Marketing Season (RMS) 2023-24. However, as of June 12, only 261.99 lakh metric tonnes of wheat had been procured.

On February 21, the India Meteorological Department (IMD) forecasted above-normal maximum temperatures by 3 to 5 degrees Celsius in northwest, central, and western India. The IMD highlighted the potential adverse effects of higher day temperatures on wheat crops during their reproductive growth period, which is sensitive to temperature. Subsequently, major wheat-producing regions such as Punjab, Uttar Pradesh, Madhya Pradesh, and Haryana experienced strong thunderstorms, lightning, gusty winds, and hailstorms. It was estimated that over 5 lakh hectares of wheat crop were damaged in Madhya Pradesh, Rajasthan, and Uttar Pradesh.

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