India has recently concluded its wheat procurement season with the government purchasing 25.4 million metric tonnes from domestic farmers, marking a 1.55% decrease compared to the previous year’s procurement figures. This announcement comes from government sources who revealed the data on Wednesday.
The procurement process, managed by the government-backed Food Corporation of India (FCI), faced a slow start last month but saw an uptick in recent weeks, according to undisclosed sources familiar with the matter. Despite the recent momentum, trade and industry experts doubt that India, the world’s second-largest wheat producer, will achieve its procurement target of 30-32 million tons for this season.
This shortfall continues a trend from the past years, as India had also missed its wheat procurement targets in 2022 and 2023 due to unexpected weather conditions that affected output. A sudden rise in temperatures led to decreased production, which in turn drove domestic prices upward. To mitigate the impact, the FCI had to sell a record high of over 10 million tons from its stocks to bulk buyers such as flour millers and biscuit makers.
Consequently, government wheat stocks have plummeted to their lowest levels since 2008, with reserves in state warehouses totaling 7.5 million tons at the beginning of April, down from 8.35 million tons a year earlier. This stands in stark contrast to the average wheat stocks of 16.7 million tons on April 1 over the past decade.
However, May brings a glimmer of hope as new season purchases by the FCI have bolstered reserves, pushing May inventories higher than April’s figures. India’s priority this year is to replenish its wheat reserves to stabilize domestic prices, which have remained above the state-fixed minimum buying price since the previous crop was harvested.
In an effort to ensure adequate procurement, India has taken proactive measures. Last month, Reuters reported that the country had urged global and domestic trade houses to refrain from purchasing new-season wheat from local farmers, aiming to support the FCI in procuring large quantities to shore up its reserves.
This move reflects India’s strategic approach to managing its agricultural commodities, especially wheat, which holds significant importance in ensuring food security for its vast population. Despite the challenges faced in meeting procurement targets, India remains committed to maintaining stable wheat reserves to safeguard against market volatility and ensure food security for its citizens.
