by PressIndia plans to increase the government’s wheat purchases
Indian government’s wheat purchases could have negative consequences
The Indian government is planning large-scale wheat purchases to replenish government reserves. However, some analysts are questioning the viability of this strategy.
According to experts, the increase in wheat purchases could negatively impact grain supplies to the country’s domestic markets. According to plans, the Indian authorities intend to buy around 33.5 million tonnes of wheat in the 2024-2025 season. It is worth noting that the current volume is 14% higher than the previous figures. In the previous period, government purchases were just over 26 million tonnes.
The FCI president says the authorities hope to increase crop production and replenish stocks. However, weather conditions have not met the government’s expectations. The country has been experiencing prolonged rains that have made harvesting difficult.
Grain harvest forecasts
The government estimates wheat production for the current season at 112 million tonnes. This figure exceeds the results of the last period when farmers harvested around 110.6 million tonnes. Crop estimates by region:
— Uttar Pradesh’s production forecast is 35.5 mt;
— Madhya Pradesh farmers will harvest 23.5 mt;
— Punjab hopes to produce just over 16 mt;
— analysts estimate Haryana’s production at 11.2 mt;
— Bihar is expected to harvest the smallest crop at 6.3 million tonnes.
S&P Global Commodity Insights conducted a survey of analysts and traders. According to the results, experts are anticipating a decline in the wheat crop. Respondents predict that India’s production will be between 107 and 108 million tonnes.
In addition to the impact of weather conditions on the harvest, there are other constraints on purchases. One of these is farmer sentiment. They are unwilling to sell wheat at the minimum price of Rs 22,600 per tonne. The cost of grain in the domestic market is Rs 23.6-24 thousand, above the level guaranteed by the authorities.
Analysts note that wheat prices have been rising steadily for several months. Almost all major markets have followed this trend. The reason for this was the reduction in the world harvest last season. Many producers then suffered from the prolonged heat and lack of rainfall.
The government is keen to increase wheat purchases as wheat stocks have fallen significantly. In recent years, the level of grain in reserve stocks has fallen rapidly. In March 2024, it stood at around 9.7 million tonnes. This is the lowest level for India since 2018. By comparison, it stood at 11.7 million tonnes at the beginning of 2023.