INDIA- India’s wheat reserves have plummeted to a seven-year low, standing at 9.7 million metric tons in government warehouses, marking the lowest level since 2017. 

This decline comes on the heels of two consecutive years of poor wheat harvests, prompting the state to initiate record sales in a bid to bolster domestic supplies and alleviate local price pressures.

The Food Corporation of India reported the diminished wheat reserves, highlighting a significant drop from the 11.7 million tons recorded in March 2022.

Despite the tightening supply situation, the Indian government has refrained from easing import restrictions, including the existing 40% tax on wheat imports or direct purchases from major suppliers like Russia. 

Instead, authorities have opted to draw from state reserves to sell wheat to bulk consumers such as flour millers and biscuit-makers. This move aims to stabilize domestic prices, which have remained above the state-fixed minimum purchase price since the previous crop cycle.

Since June 2023, the government has been actively engaged in selling wheat to private entities, with sales exceeding 9 million tons by the end of last month, setting a new record, according to an unnamed senior government official.

India’s efforts to manage its wheat inventory date back to 2020 when the country initiated free wheat distribution to mitigate food shortages during pandemic-induced lockdowns. 

However, the recovery of wheat reserves in state warehouses has been slower than anticipated due to consecutive years of low wheat output in 2022 and 2023.

In response to the diminished output, India implemented a ban on wheat exports in 2022 following a decline in production exacerbated by a global shortfall caused by the Russia-Ukraine conflict. 

Despite the export ban, prices continued to rise, and industry officials suggest that last year’s crop fell short of the government’s initial estimates of a record 110.6 million tons.

The discrepancy in output is further underscored by the government’s wheat procurement figures, with purchases totaling 26.2 million tons from local farmers last year, falling short of the target of 34.15 million tons.

In light of the dwindling stocks, traders based in New Delhi suggest that the government may consider increasing procurement from farmers or relaxing import regulations to replenish reserves. Some states have already offered incentives, such as bonuses for wheat purchases, to address the shortfall.

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