The Union government has taken decisive steps to combat cereal inflation, introducing stricter regulations regarding the stockpiling of wheat by traders and intensifying monitoring of rice stocks as the festive season approaches in the coming month.
Union food secretary, Sanjeev Chopra, emphasized that there is an ample supply of key commodities such as rice, wheat, and sugar, with a surplus of wheat. However, he noted that there have been attempts to “create artificial scarcity on the pretext of a poor monsoon.”
Chopra also expressed confidence in a bumper rice crop, citing robust acreage reported by the agriculture ministry.
Current Stock Levels
According to data from the food ministry, the government currently holds 25.5 million tonnes of wheat, surpassing the minimum stock requirement of 20.2 million tonnes. Furthermore, an additional 8.7 million tonnes of wheat, beyond the buffer requirement, is set to be released into the markets.
Regarding sugar stocks, the official disclosed that there are 8.5 million tonnes in reserve, sufficient to meet demand for the next three-and-a-half months. The crushing of cane from summer harvests is set to commence next month.
Response to Sugar Production Concerns
Addressing concerns about a potential decline in sugar production this year and its impact on prices, the official dismissed such worries. He cited improved rainfall in critical cane-growing states like Karnataka and Maharashtra in September as a positive sign, countering the earlier concerns arising from rainfall deficiency in August.
Effective immediately, the government has established a limit of 2,000 tonnes for the quantity of wheat that traders, wholesalers, and supermarkets can stock. This measure, known as stock limits, aims to bolster supplies in retail markets. Millers are permitted to stock up to 75% of their total installed capacity. Notably, this limit was reduced from 3,000 tonnes, which was set in June.
These new restrictions on wheat stockpiling come in response to a 4% increase in spot prices of wheat on the National Commodity and Derivatives Exchange Limited. Despite the ban on wheat exports, this price rise could potentially impact retail prices. The government’s intent is to prevent traders and wholesalers from hoarding excessive stocks, thus preventing any artificial scarcity.
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