Why did the govt impose a ceiling on wheat stocks?
Context:
- The amount of wheat that merchants, wholesalers, retailers, large chain shops, and processors may hold is regulated by the Union Government. The goal is to maintain supply to stabilise the price of the necessary good.
- 3,000 metric tonnes can be held by traders and distributors. merchants and large chain merchants can each store up to 10 metric tonnes, while the latter can store up to 3,000 metric tonnes across all of their depots.
- For the agricultural year 2022–2023, the Agricultural Ministry predicts wheat production would reach a record 1,127.43 lakh metric tonnes.
Limits on Wheat Stock:
- Traders/Wholesalers: The maximum amount of wheat that traders and wholesalers may hold in stock is 3,000 metric tonnes.
- Retailers and Big Chain Retailers: Retailers are permitted to store up to 10 metric tonnes of wheat at each location, while big chain retailers are permitted to store up to 3,000 metric tonnes of wheat at all of their depots.
- Processors are permitted to stock up to 75% of their installed yearly capacity.
Reporting Requirements
- Entities including traders, wholesalers, retailers, big-chain stores, and processors are required to report their stock positions and keep the Department of Food and Public Distribution portal updated with any changes.
- These entities have 30 days from the notification date to reduce the number of shares they hold if it exceeds the prescribed limitations.
Open Market Sale Scheme (OMSS).
- The government intends to sell 15 lakh tonnes of wheat from the central pool through the Open Market Sale Scheme (OMSS).
- E-auctions will be used to sell wheat to producers of wheat products, individual dealers, flour mills, and bulk buyers.
- The goal is to keep wheat retail prices under control.
- The first shipment of wheat will be sold in lots of 10 to 100 metric tonnes, and depending on market conditions and demand, additional deliveries might be made.
- To lower rice prices, the government also plans to sell some of it through OMSS; the amount for the first round of the e-auction will soon be chosen.
Concerns about wheat production
- Unseasonal rainfall, hailstorms, and warmer temperatures in some areas have sparked worries about the total wheat output.
- Higher pricing for wheat may result from lower output.
- Prices that are higher than what the government pays for purchases could hamper its efforts to keep supply adequate.
Price of wheat today:
- On June 14, wheat’s daily average retail price was 29 cents per kilogramme, up from 27.54 cents per kilogramme a year earlier.
- The price per quintal at the wholesale level was $2,593.5, up from $2,557.89/quintal the month before and $2,423/quintal a year before.
Government Procurement and Stock:
- For the current Rabi Marketing Season (RMS) 2023–2024, the government set a goal of acquiring 341.5 lakh metric tonnes of wheat for the Central Pool.
- 261.99 lakh metric tonnes of wheat had been purchased as of June 12.
- According to Reuters, slower government purchases in recent days as local prices rose could result in a reduction of a fifth in India’s wheat purchases in 2023 compared to the earlier estimate.
- In June, the government had 313.9 lakh metric tonnes more wheat in the central stock than it did in the same month last year (311.42 lakh metric tonnes).
Wheat Production Estimates:
- The Ministry of Agriculture estimates wheat production for the agricultural year 2022-23 to be a record 1,127.43 lakh metric tonnes.
- This represents an increase of 50.01 lakh metric tonnes compared to the previous year.
- The optimistic projection is based on the increased area of wheat cultivation and expectations of better yield.
