Indian Wheat Inventories Hit Lowest Levels Since 2017

New Delhi, Mar 13 (KNN) Indian wheat inventories have plummeted to 9.7 million metric tons, marking the lowest levels since 2017, following consecutive years of low crops.

The state has responded by selling record volumes to bolster domestic supplies and mitigate local price hikes.

According to the state-run Food Corporation of India, wheat reserves in state warehouses have dropped from 11.7 million tons in March 2022 to 9.7 million tons at the beginning of March 2024.

Despite the pressing supply shortage, the government has refrained from reducing the current 40 per cent tax or directly engaging with top suppliers like Russia, opting instead to draw from state reserves and sell wheat to bulk consumers such as flour millers and biscuit-makers.

This strategy aims to stabilise domestic prices, which have surpassed the state-fixed minimum buying price post-harvest.

The challenges in wheat production have been exacerbated by recent years' events.

In response to the COVID-19 pandemic, India initiated a program offering free wheat to millions during lockdowns in 2020.

However, lower wheat outputs in subsequent years slowed inventory recovery at state warehouses.

In 2022, India imposed a ban on wheat exports due to diminished output caused by elevated temperatures, despite increased global demand stemming from the Russia-Ukraine conflict.

This ban failed to prevent price hikes, with last year's crop falling short of government estimates.

Additionally, the government's procurement of wheat from local farmers in 2023 amounted to 26.2 million tons, well below the target of 34.15 million tons, further indicating reduced output.

Commenting on potential solutions, a trader based in New Delhi suggested that the government could increase procurement from farmers or consider allowing imports to replenish stocks, reported BS.

(KNN Bureau)