Indian Wheat Stocks Hit 16-Year Low Amid Record Sales

Indian wheat stocks held in government warehouses have dropped to their lowest level in 16 years due to two consecutive years of reduced crop yields. This decline has prompted New Delhi to engage in record sales in an effort to bolster domestic supplies and alleviate local price pressures.

At the beginning of April, wheat reserves in state-run storage facilities totaled 7.5 million metric tons, marking a significant decrease from the 8.35 million tons recorded a year ago. This downward trend contrasts starkly with the average wheat stocks of 16.7 million tons observed over the past decade on April 1, according to data compiled by the Food Corporation of India (FCI).

A senior government official highlighted the rationale behind the dwindling stocks, attributing it to the sale of a record 10 million tons of wheat in the previous year aimed at stabilizing prices.

Despite the tight supply situation, the Indian government has refrained from easing import restrictions, such as the 40% tax on wheat imports, or directly procuring wheat from major suppliers like Russia. Instead, it has opted to dip into state reserves to supply wheat to bulk consumers such as flour millers and biscuit-makers, with the goal of curbing domestic prices that have exceeded the state-fixed minimum procurement price since the last harvest.

The government remains committed to maintaining wheat stocks above the buffer norm, which mandates a minimum of 7.46 million tons of wheat on April 1. Looking ahead, officials aim to ensure that wheat stocks do not fall below 10 million tons.

To achieve this goal, the government needs to procure an estimated 30 to 32 million tons of wheat from farmers this year. However, past procurement targets were not met in 2022 and 2023 due to adverse weather conditions, including heat waves that affected crop yields.

In 2022, amid a global shortfall exacerbated by the Russia-Ukraine conflict, India imposed a ban on wheat exports despite increasing international demand. If the government fails to procure the necessary quantity of wheat, there are discussions about the possibility of allowing duty-free imports following the general election.

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