Demand up, production down: Atta prices at record high

Demand up, production down: Atta prices at record high

The India-wide average monthly retail price of wheat flour (atta) was Rs 32.38 per kg in April, the highest since January 2010, the first month for which data is available.

Atta prices rose as wheat production and stocks fell in India and demand increased outside the country.

Data reported by the State Civil Supplies Departments to the Union Ministry of Consumer Food and Public Distribution shows that the average retail price of wheat flour across India was of Rs 32.78/kg on Saturday May 7, i.e. 9.15% more than the price (Rs 30.03 per kg) a year ago.

Among the 156 centers for which data is available, Saturday’s price was highest in Port Blair (Rs 59/kg) and lowest (Rs 22/kg) in Purulia in West Bengal.

Among the four metropolises, the average retail price of wheat flour was highest in Mumbai (Rs 49/per), followed by Chennai (Rs 34/kg), Kolkata (Rs 29/kg) and Delhi (Rs 27 / kg).

Average daily retail prices of wheat flour across India have increased since the start of the calendar year, having increased by 5.81% since January 1, the data showed. The April record was significantly higher than the average retail price of Rs 31/kg recorded in April 2021.

Sources said the steady increase in the price of flour is due to rising wheat prices amid declining production due to the war in Ukraine and higher foreign demand for Indian wheat. The high domestic price of diesel has increased the logistics cost of wheat and flour.

Retail inflation, based on the consumer price index, of non-PDS “wheat/atta” reached 7.77% in March 2022, the highest level since March 2017, when it was recorded at 7.62%.

Along with wheat flour, bakery bread prices have also seen a sharp increase in recent months. Bakery bread retail price inflation was 8.39% in March this year, the highest since January 2015, when comparable data is available.

Flour and bread prices rise as the country begins to decline in wheat production. The government had set a wheat production target of 110 million tonnes for 2021-22, which is higher than the estimated production of 109.59 million tonnes in 2020-21. In fact, the second advance estimate released by the Ministry of Agriculture and Farmers’ Welfare on February 16 this year pegged the total wheat production for 2021-22 at 111.32 million tonnes.

The sudden rise in temperatures in March, however, dampened the government’s hopes of record production. Officials now say total wheat production for 2021-22 could be below target. Union Food Secretary Sudhanshu Pandey said last week that wheat production is expected to be around 105 million tonnes. A statement released by the Ministry of Food cited the early onset of summer as the reason for the lower wheat yield.

Lower production and increased demand from private buyers have seen wheat prices on the open market hover above the minimum support price (MSP) of Rs 2,015 per quintal announced by the government for the season. current commercialization of rabi. In this situation, government agency procurement is expected to be below target. According to Ministry of Food estimates, wheat supply in the current rabi marketing season is expected to be 195 lakh tons, which is significantly below the government’s original supply target of 444 lakh tons and to last year’s actual supply of 433 lakh tonnes. According to information available on the FCI portal, 156.92 lakh tons of wheat had been procured till April 28.

Data from the Ministry of Food shows that wheat stocks stood at 190 lakh tonnes at the start of the 2022-23 financial year, which together with purchases of 195 lakh tonnes for the current season, is expected to rise to 385 lakh tonnes. tons. Taking into account allocations for distribution under the National Food Security Act (NFSA), 2013; Other social assistance schemes; and Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), 2022-23 is expected to end with a balance of 80 lakh tonnes of wheat in government stocks, slightly above the minimum stocking standard of 75 lakh tonnes as of April 1.

“On the global grain management side, we are still in a surplus situation…,” Pandey said at a news conference last week. “This year, due to higher market prices and increased demand from private players for both domestic and export, the purchase by government agencies is less, but it benefits farmers. Farmers get good prices for wheat; previously they weren’t getting that price and had no choice but to sell to the government,” he said.

Food Ministry officials said contracts have been finalized for the export of 40 lakh tonnes of wheat and 11 lakh tonnes were exported in April. India exported about 70 lakh tons of wheat last year (2021-22).

In light of lower opening stocks and lower purchases, the government has begun to rework its wheat calculations by revising state allocations under the PMGKAY, under which 5 kg of foodgrains per month are provided free of charge to individual beneficiaries covered by the NFSA.

After the revision, the allocation of wheat under the PMGKAY will drop to 7.12 lakh tons per month from the current 18.21 lakh tons per month, saving the government about 55 lakh tons of wheat over the five months. remnants of the PMGKAY, which is expected to run until September.

While the NFSA and PMGKAY have provided a cushion to around 80 million beneficiaries, a large number of people living just over the line are not covered by any Central or state food grain programs. This group of people is likely to be the hardest hit by rising atta and bread prices.

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