High demand and low production: Atta prices hit a record high
The average monthly retail price of wheat flour (atta) in India was 32.38 rupees per kilogram in April, the highest since January 2010, the first month for which data is available.
Atta prices rose as both production and stocks of wheat in India fell, and demand rose outside the country.
Data reported by state civil supply departments to the Ministry of Consumer Affairs, Food and General Distribution shows that the average retail price of wheat flour in India was Rs 32.78/kg on Saturday (May 7) – 9.15 per cent higher than the price (Rs 30.03 per kg). a year ago.
Among the 156 centers for which data is available, the price on Saturday was the highest in Port Blair (Rs 59/kg) and lowest (Rs 22/kg) in Purulia in West Bengal.
Among the four metros, the average retail price of wheat flour was the highest in Mumbai (Rs 49/each), followed by Chennai (Rs 34/kg), Kolkata (Rs 29/kg) and Delhi (Rs 27/kg).
The data showed that the average daily retail prices of wheat flour across India have been on the rise since the start of the calendar year, after rising 5.81 percent since Jan. The record in April was well above the average retail price of Rs 31/kg recorded in April 2021.
Sources said that the steady increase in flour prices is due to the rise in wheat prices amid the decline in production due to the war in Ukraine, and the increase in external demand for Indian wheat. The high domestic price of diesel added to the logistical cost of both wheat and flour.
Retail inflation, based on the consumer price index, for wheat/atta not subject to PDS reached 7.77 percent in March 2022, the highest level since March 2017, when it recorded 7.62 percent.
Besides wheat flour, the prices of bread in baked goods have also risen sharply in recent months. Retail inflation for baked goods reached 8.39 percent in March of this year, the highest since January 2015 onwards, the period for which comparable data are available.
Flour and bread prices are on the rise at a time when the country is staring at a decline in wheat production. The government has set a wheat production target of 110 million tons for the period 2021-22, which is higher than the estimated production of 109.59 million tons in 2020-2021. In fact, the second advance estimate released by the Ministry of Agriculture and Farmers Welfare on February 16 this year put the total wheat production for 2021-22 at 111.32 million tons.
However, the sudden increase in temperatures in March dampened the government’s hopes of achieving record production. Officials now say total wheat production for 2021-22 may be below target. Union Food Minister Sudhanshu Pandey said last week that wheat production was expected to be around 105 million tonnes. A statement issued by the Ministry of Food indicated that the beginning of summer was a reason for the decline of the wheat harvest.
The drop in production and higher demand from private buyers has left open market wheat prices hovering above the Minimum Support Price (MSP) of Rs.2,015 per quintal announced by the government for the current spring marketing season. In this case, public procurement by government agencies is expected to be below target. According to estimates by the Food Ministry, the purchase of wheat during the current spring marketing season is likely to be 195 thousand tons, which is much lower than the government’s initial purchase target of 444 thousand tons and last year’s actual purchases of 433,000 tons. According to the information available on the FCI portal, 156.92 thousand tons of wheat were purchased as of April 28.
The data of the Ministry of Food shows that wheat stocks amounted to 190 thousand tons at the beginning of the 2022-23 fiscal year, which is expected to rise to 385 thousand tons in the current season, with 195 thousand tons being purchased in the current season. Taking into account the allocations for distribution under the National Food Security Act 2013; other welfare schemes; And Pradhan Mantri Grape Kalyan Anna Yojana (PMGKAY), the 2022-23 period is expected to end with 80,000 tons of wheat in government stocks, which is just over the minimum stockpiling of 75,000 tons as on April 1.
“From the overall grain management side, we are still in surplus…” Pandey said at a press conference last week. “This year due to the increase in market prices and increased demand by private actors for domestic and export purposes, the purchase by government agencies is less, but this is in the interest of the farmers. The farmers get good prices for wheat; earlier they were not getting that price, and it was not They have no choice but to sell to the government.
Food Ministry officials said contracts have been completed to export 40 lakh tons of wheat, and 11 lakh tons were exported in April. India exported about 70,000 tons of wheat last year (2021-2022).
Due to lower opening stocks and fewer purchases, the government began to reformulate its wheat accounts by reviewing state allotments under PMGKAY, under which 5 kg of food grains per month are provided free of charge to individual beneficiaries covered under the NFSA.
After the revision, the wheat allotment under PMGKAY will decrease to 7.12 thousand tons per month from 18.21 thousand tons per month now, enabling the government to provide about 55 thousand tons of wheat during the remaining five months of PMGKAY, which is scheduled to run until September.
While NFSA and PMGKAY have provided cushion for about 80 crore beneficiaries, a significant number of people who live above the line are not covered under any of the center or states’ food-grain scheme. This group of people is hardest hit by the high prices of bread and atta.