Despite a record wheat production this season, prices of wheat are on the rise due to low production in some states. This may lead to the Central government not being able to meet its procurement targets. As a result, there is speculation that the ban on wheat imports may be lifted or prices could increase further.
**Challenges in Wheat Procurement**
The Ministry of Agriculture had estimated a record production of 11.2 crore tonnes of wheat by 2024. However, erratic rainfall in 2022 and 2023 had affected production, leading to a decrease in storage. Some states, especially Madhya Pradesh, witnessed a decline in production.
**Current Scenario and Government Interventions**
The wholesale prices of wheat are currently 5.3% higher, while consumer prices have increased by 6.5% as of May 27. Government agencies procure wheat from farmers for three main purposes – supplying free food under the National Food Security Act, maintaining reserves for the future, and intervening in the market to control prices.
**Wheat Procurement Challenges**
By May 24, government agencies had purchased 26 metric tons of wheat, slightly more than the previous year. However, the procurement is expected to fall below the target of 30-32 metric tons for the third consecutive year. The decline in procurement is particularly notable in Madhya Pradesh.
**Potential Impacts of Import Restrictions**
Since 2022, the Central government has imposed a ban on wheat imports. However, due to domestic demand, reduced government reserves, and weak global prices, India may need to import two metric tons of wheat after six years. This could have implications on market prices and farmer incomes.
**Price Dynamics and Farmer Support**
Farmers receive a minimum support price of Rs 2,275 per quintal from the government, but premium wheat varieties fetch higher market prices than the MSP. States like Madhya Pradesh and Rajasthan are offering bonuses per quintal, leading farmers to withhold their produce. The retail inflation for wheat is at 6.5%, with a slight increase noted in April compared to the overall food inflation. It is anticipated that prices may rise further in the coming months due to reduced supply.
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