Our daily bread’s getting hot. Can imports help?

livemint.com:

Mint looks at the scenario: The agriculture ministry said in February that it expects a harvest of 112 million tonnes (mt) in 2024.That’s a record. However, this is only a tad higher than the 2021 crop, estimated at 110 mt. In 2022 and 2023, climate shocks— including heatwaves and untimely rains—impacted production, leading to a drawdown of public stocks.

Harvest in the current year was impacted in some states—notably Madhya Pradesh—due to a warmer winter. Data from the consumer affairs department shows that wholesale wheat prices are currently 5.3% higher year-on-year while consumer prices are up 6.5% (as of 27 May). Government agencies purchase wheat from farmers for three purposes—supply under the free foodgrain scheme to over 810 million beneficiaries, maintain a strategic stock and use a portion of that to intervene in markets to tame prices.

Till 24 May, government agencies purchased 26 mt of wheat, marginally more than last year. However, this is likely to fall short of the target (30-32 mt), for the third year in a row. Procurement is lower than target due to a sharp drop in purchase in Madhya Pradesh.

Farmers are selling to private traders instead as premium varieties are fetching them a higher price. It depends on buffer stocks and how prices move in the coming months. Wheat imports are banned.

But the US department of agriculture has forecast that India may end up having to import 2 mt wheat due to domestic demand, a decline in government stocks and weak global prices. If India does decide to import wheat, it would be after a gap of six years. Farmers get a minimum support price (MSP) of ₹2,275 per quintal from the government.