NEW DELHI, INDIA — Seeking to further tamp down on wheat prices that spiked to record levels in January, the government of India will provide an additional 2 million tonnes of the grain to bulk consumers such as flour millers, Reuters reported, citing a government announcement.
Last month, the government announced a 3-million-tonne allocation to help dampen local prices, which have stayed above the government-fixed price of 21,250 rupees ($256.77) per tonne. Domestic wheat prices reached an all-time high of $393 per tonne in January.
Wheat prices have corrected nearly a quarter since last month. The government has been trying to bring down prices further to ensure it can buy ample quantity from farmers in the new season, a New Delhi-based dealer with a global trading firm told Reuters.
Each year the government-supported Food Corporation of India (FCI) buys millions of tonnes of wheat at a fixed support price. It also buys wheat from local farmers. State purchases of wheat fell 53% to 18.8 million tonnes last year, as open market prices rose above the rate at which the government buys the staple from domestic producers.
The country grows only one wheat crop in a year, with planting in October and November, and harvesting from March.
Dry weather and extremely high temperatures last spring reduced India’s 2022-23 crop to 103 million tonnes, down from the prior year’s record output of 109 million and contributed to soaring prices for wheat-based foods, the world’s second most populous country and the second largest consumer of wheat per capita.
India’s wheat exports increased after Russia’s invasion of Ukraine on Feb. 24, 2022, pushing up local wheat prices with greater global demand. India ordered a ban on exports in May, but that did not stop domestic price increases.