October 24, 2023

India increases price for buying of domestic new season wheat

India raised the price at which it buys locally produced new season wheat by ₹150 (US$1.81) or 7% to encourage farmers to expand the growing area as the country tries to increase production.

India sets a price each year to protect domestic farmers from distress sales and stock grain for emergency needs. It also uses grain to sell food to the poor at low prices.

The revised purchase price of ₹2,275 (US$27.33) per 100kg for 2024 compares with ₹2,125 a year ago, Federal Information and Broadcasting minister Anurag Thakur told reporters last week.

"The 7% increase is decent for encouraging farmers to expand their areas, but the government should have raised prices further to align with market prices, which are significantly higher than the government price," said a Mumbai-based trader.

In key producing markets, the wheat price was above ₹2,600 (US$31.20) on October 18, an eight-month high, propelled by strong demand for big festivals, limited supplies and as import duty makes overseas buying unfeasible for domestic flour mills.

The government estimated wheat output jumped to a record 112.74 million metric tonnes in 2023, but a leading trade body said the harvest was at least 10% lower than the farm ministry's estimate.

As of October 1, wheat stocks in government warehouses stood at 24 million metric tonnes, sharply down compared with a five-year average of 37.6 million tonnes.

- Reuters