The Aryavarth Express
Agency(New Delhi): India’s wheat stockpiles in government warehouses have diminished to their lowest levels since 2017, reaching 9.7 million metric tons at the onset of this month. This significant reduction from the 11.7 million tons recorded in March 2022 is attributed to consecutive years of subpar harvests, which compelled the state to offload record amounts in an effort to bolster domestic supplies and mitigate local price surges.
The decline in reserves has spurred discussions about encouraging imports to alleviate the strain on supplies. However, the government has opted not to lower the existing 40% import tax or engage in direct purchases from leading global suppliers, including Russia. Instead, the focus has been on liquidating state reserves by selling wheat to major consumers such as flour mills and biscuit manufacturers, aiming to temper domestic prices that have consistently exceeded the government-set minimum purchase price since the last harvest.
The government’s decision in June 2023 to initiate sales of wheat to private entities led to the sale of over 9 million tons by the end of last month, marking an unprecedented high, according to a senior government official.
This move comes in the wake of initiatives launched in 2020 to distribute free wheat to millions of Indians, mitigating food scarcity during the pandemic-induced lockdowns. However, the anticipated recovery of state warehouse inventories was hampered by reduced wheat production in 2022 and 2023.
The impact of climate change became evident in 2022 when a spike in temperatures resulted in diminished yields, prompting India to halt wheat exports. This decision was aimed at curtailing domestic price inflation, although it did little to prevent price hikes, with trade and industry experts suggesting that the actual output was considerably lower than the government’s projection of a record 110.6 million tons.
Moreover, the government’s procurement of wheat from local farmers last year fell short of its target, indicating further evidence of reduced production. To address the dwindling stockpile, options include boosting procurement from farmers or facilitating imports, with some states already implementing bonus schemes for wheat purchases.
As India grapples with these challenges, the focus remains on strategic measures to replenish wheat reserves and ensure food security for its population amidst fluctuating global and domestic agricultural dynamics.