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Centre may sell cereals in open market to rein in prices
India has a surplus of federally held stocks of rice and wheat, and the government could intervene in the open market “if needed” by selling cereals at a discount to curb prices, food secretary Sudhanshu Pandey said on Monday.
India has a surplus of federally held stocks of rice and wheat, and the government could intervene in the open market “if needed” by selling cereals at a discount to curb prices, food secretary Sudhanshu Pandey said on Monday.
The government expected sufficient output of kharif or summer-sown rice currently being harvested and hopes to procure 77 million tonnes of paddy, compared to the previous year’s 78 million tonnes, Pandey said. The government’s paddy stocks could go up to 90 million tonnes, taking into projections the upcoming winter-sown rice season. Paddy is mostly sown in summer.
“The rainfall condition this year has been fairly good in the country and the production of paddy is expected to remain normal,” said Food Corporation of India’s chairman Ashok KK Meena, who was also present at the briefing, citing a presentation.
A prolonged heatwave in March affected India’s wheat output, prompting the government to ban export in May. The government also curbed overseas rice shipments last month, imposing an export duty of 20% and banning shipments of broken rice, to shore up domestic availability.
Wheat prices have remained higher as farmers found it lucrative to sell to exporters than to the government, which offers cultivators the minimum support price, which is a federally determined floor price, the ministry said.
“Yet, the rise in wheat prices is not abnormal since prices in 2021 were depressed because the government had sold large stocks in the open market and also bore its transportation costs. Therefore, wheat prices were very low last year,” Pandey said.
After the country banned overseas wheat shipments in May, exports had fallen to 4.2 million tonne from 7.2 million tonne in the previous year. “So, the government actually has a surplus of 2.5 million tonne,” Pandey said. “The government may sell stocks in the open market if needed.”
India’s consumer inflation rate surged to a five-month high of 7.41% in September on an annual basis, compared to a 7% rise in the previous month, breaching the Reserve Bank of India’s target of 4-6% for the ninth straight month, data released on Wednesday showed.
The jump in retail prices was driven by broad-based increase in food prices in September, just like in the previous month, with cereals, pulses, vegetables, milk and milk products maintaining a rising trend. Food inflation leapt to a 22-month high of 8.4% in September, complicating the government’s responses so far to bring down prices.
The government’s cereal stocks, which supply subsidised grains to 800 million people, have declined to a five-year low as extreme weather pummelled both winter-sown wheat and summer-sown rice crops. Total stock of the two staples, at 51.14 million tonne as on October 1, were nearly 66% above the mandatory buffer and strategic reserve stockpile of 30.77 million tonne that the central government is required to maintain for this time of the year, data from the Food Corporation showed.
