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To control domestic prices, India bans wheat exports with immediate effect

However, the export shipments for which irrevocable letters of credit (LoC) have been issued on or before the date of this notification will be allowed, DGFT said in a notification dated May 13.

Published: 14th May 2022 09:32 AM  |   Last Updated: 14th May 2022 11:43 AM   |  A+A-

Representational Image. (Photo | PTI)

Representational Image. (Photo | PTI)

Express News Service

CHANDIGARH: With the Russia-Ukraine conflict disrupting global wheat trade and the procurement of wheat dipping down this year due to hosts of reasons and the prices of wheat flour (Atta) is an all time high in last one decade as it is between Rs 32 to Rs 33 per Kilogram and now union government banning export of the grain with immediate effect it is likely to stabilize the prices of wheat.

Sources said that an official notification has been issued yesterday Directorate General of Foreign Trade (DGFT) as it called the action a part of measures to control rising domestic prices. However, the export shipments for which irrevocable letters of credit (LoC) have been issued on or before the date of this notification will be allowed.

Sources in the state food supplies department said that under the National Food Security Act five kilograms of food grains  (wheat, rice, course grains as the case may be) is distributed to the eligible beneficiaries every month at the subsidized rate of Rs 2 per kilogram of wheat, Rs 3  per kg of rice and One Rupee per kilogram of course grain).

In addition the Prime Minister announced free five Kg of ration (food grains) to every beneficiary under Pradhan Mantri Garib Kalyan Yojana (PMGKY) to tide off the crisis resulting from COVID-19 pandemic. 

In March this year sixth phase was announced as per which free food grains are to be distributed to the beneficiaries for another six months from April to September resulting in requirement of wheat under National Food Security Act (NFSA) and PMGKY is going to be nearly 390 Lakh Metric Tonnes (LMT), as under NFSA 260 LMT and 130 LMT in PMGKY.

However as on March 31 the wheat reserves in the country was 190 LMT further 74 LMT has to be kept as buffer stock against the target of nearly 400 LMT. The procurement of wheat is going to be around 200 LMT in the country. 

Meanwhile, the central government has revised downwards the estimate for wheat production by 5.7 per cent to 105 million tonnes in the 2021-22 crop year ending June from the earlier projection of 111.32 million tonnes, as the crop productivity has been affected due to the early onset of summer. The wheat production stood at 109.59 million tonnes in the 2020-21 crop year (July-June). 

The wheat procurement of the centre is set to decline by more than half to 19.5 million tonnes in the current rabi marketing year amid higher exports and likely fall in output,’’ said an official.

Sources said that the market prices of wheat and predictions are stabilized by the open market sale scheme (OMSS) of the Food Corporation of India (FCI) which releases wheat by way of open tender at subsidized rate to the local flour mills. 

This scheme is a price stabilization scheme however FCI in the coming months is likely to have no reserves for issuance under OMSS thus flour mills will have to buy from open market. Thus resultantly the market prices of wheat flour (Atta) and wheat related products such as bread and biscuits, maida will increase.

While the wheat procurement this year by government agencies in Punjab till yesterday has been 96.15 LMT against the target of 132 LMT and private traders purchased 6.09 LMT. While in Madhya Pradesh it was 41 LMT against the target of 129 LMT. These are the two major wheat producing states of the country.

Leading agriculture expert Devinder Sharma tweeted,`` Good to be restriction being imposed on wheat exports. With wheat prices in intentional markets jumping by 60 per cent in April (as per World Bank) the trade interest in unbridled exports is obvious but policy makers have to ensure adequate stocks for meeting domestic need.’’

Sharma earlier said that the wheat prices registered an increase of just nine percent in the past four years but the prices of atta went up by 42 per cent.

Punjab Roller Flour Mills Association President Naresh Ghai claims that there is no such shortage of atta in the market and nor there is price hike of atta as compared to prices  before April. There is no chance of substantial hike in price in near future, as centre has banned export of wheat. At present in Punjab at the flour mills atta is being sold for Rs 25 per Kg.

Meanwhile the retailers are selling it between Rs 30 to 32 per kg and branded atta is sold even at higher rates.  The processor is not getting any extra profit. On the other hand we are under stress due to hike in prices of wheat. branded Atta wlike Ashirvads which  feeds higher strata of the society Rs 40 per kg.

As per official data with the union consumer affairs ministry central government the all-India average retail price of wheat flour or atta was Rs 29.14 per kg on May 8.The maximum price of atta was Rs 59 per kg, minimum price was Rs 22 per kg and modal price Rs 28 per kg. 

The atta prices stood at Rs 49 per kg in Mumbai, Rs 34 per kg in Chennai, Rs 29 per kg in Kolkata and Rs 27 per kg in Delhi. While last year on May 8 the maximum price was Rs 52 per kg, minimum price was Rs 21 per kg and modal price was Rs 24 per kg.



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