Wheat Prices Shoots Up 50 Percent Above MSP May Impact Government Buying This Rabi Season

Wheat Price Hike: The new wheat crop will be ready in the next two months. Obviously, in this Rabi season also, the government will purchase wheat for its stock to provide wheat to the poor through the PDS system and to control the prices in the open market. But this season it is not going to be so easy to buy wheat at the MSP of the government. The reason is the huge increase in the prices of wheat and the price of wheat has reached 50 percent higher than the MSP of wheat fixed by the government for this rabi season.

Wheat price is 50% more than MSP

For the 2022-23 Rabi season, the government has fixed MSP (MSP) of Rs 2125 per quintal to buy wheat. While the price of wheat has reached above 3150 per quintal in the open market. And if the government does not release the stock of wheat in the open market in 15 days, then a further increase of 5 to 6 percent in the prices of wheat can be seen. In earlier years, farmers preferred to sell wheat to Food Corporation of India at MSP. Because then farmers used to get less price than MSP in the open market. But the situation changed in the 2021-22 Rabi season when farmers preferred to sell wheat to private traders in the open market as they were getting higher prices. In the 2021-22 season, there was a 56 percent decline in FCI’s wheat procurement.

wheat procurement challenge

In the current Rabi season, keeping in view the food security in the country, FCI will have to buy wheat in sufficient quantity. On top of that, the Lok Sabha elections are also going to be held in 2024, in such a situation the government cannot take the risk of buying less wheat. There are less chances of softening in the prices of wheat, in such a situation, the government will give bonus on MSP, only then the government can get success in buying wheat in sufficient quantity. On January 1, 2023, there was a stock of 172 lakh tonnes of wheat in FCI godowns, whereas on January 1, 2022, this stock used to be 330 lakh tonnes. The government has fixed a limit of 138 lakh tonnes of buffer stock.

Government will not allow export

Due to the ongoing war between Russia and Ukraine in May 2022, when there was a spurt in the prices of wheat in the international market, the government had banned the export of wheat to avoid any food security crisis in the country. Keeping control on prices was also a big objective. And it is believed that the government should not remove the ban on the export of wheat for the time being, as there is a sharp rise in the prices of wheat in the domestic market. By doing this, it will help in increasing the supply of wheat in the domestic market, which can help in reducing the prices.

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