Deflating Inflation: Some Elements Trying to Create Artificial Scarcity, Food Secretary Tells News18

In order to tame inflation in the price of wheat and ensure availability, the government has revised stockholding limits to 2,000 metric tonnes for traders, retailers, big chain retailers, and processors “with immediate effect” from 14.09.2023. This is a downward revision of 1,000 MT from the earlier stock limit of 3,000 MT imposed on June 12. Secretary (Food and Public Distribution) Sanjeev Chopra said, “The wheat prices on the NCDEX in the past month have gone up by about 4% and we are finding that although there is adequate availability of wheat in the country, still I think there are some elements that are trying to create artificial scarcity.”

Data shared by the department of food showed that while the spot price of wheat was Rs 2,400 per quintal, the retail price was still holding at Rs 30 a kg across the country. However, there is an apprehension that the spike in the price in the NCDEX may pass on to the retail rate. “Although the prices at the retail level are still holding good, we are anticipating that with this uptick in NCDEX prices, there may be a reflection of these prices in the retail market. So for that reason, we are ensuring that the stock limits are brought down and that the excess stock that is held by entities like traders, wholesalers, and big chain retailers should be offloaded. So they should not be hoarding for the next financial year,” said Chopra. Those holding stocks of more than 2,000 MT would be given a month’s time to offload their stock in excess of 200 MT so that almost exactly one month later, on October 12, they are aligned with the new norms.

Chopra reiterated that there was no shortage of wheat and the reasons for the spike in prices lay elsewhere. “Some people are holding and creating artificial scarcity in the country and unnecessarily the prices are going up, although there is no scarcity from the supply side in the country. Adequate stocks are available. Secondly, as I said, in the natural scheme of things also, the stocks we had given for holding as of June 12, which was 3,000 tonnes, was to hold them good for the next nine months. Since three months have already elapsed and six months are left, we have reduced it by a third. So now it is 2,000 tonnes,” he said.

In what is a clear signal to the market, the food secretary said, “For these six months, we should not have any artificial scarcity created in the country.” He explained that the government has 87 lakh tonnes of wheat over and above the buffer stock norm, as of 01.04.2024, and 85 lakh tonnes of sugar, which is more than required. Chopra said, “87 lakh tonnes is available to me to offload in the market and temper the prices of which 57 lakh tonnes are already in the process of being offloaded. So we can become more aggressive in case the situation demands but the bottom line is that adequate availability of the various food grains and the sugar stocks are there and we will deploy all the instruments that are available to us to ensure that prices are kept in control.”

There has been speculation by trading body ISMA that the sugarcane crop is getting adversely affected due to poor rains in August, which is driving the sentiment of a possible shortfall in production as well. Chopra indicated that adequate stocks are available. “So this is to clarify that there is adequate stock available of up to 35 lakh tonnes, which is sufficient for three and a half months’ requirement. Secondly, for the festive season, we are adequately prepared in terms of the stocks. Even this month, we released 25 lakh tonnes, we released 2 lakh tonnes excess in August, keeping in view that there is some requirement. Broadly, the sugar availability is good, he said. “As of now, we don’t subscribe to the view of a sharp dip.”

Similarly, reacting to the 10% jump in the price of rice, Chopra said, “Rice again is something which is on our radar. We are concerned that it has risen 10% and it is primarily happening on account of this sentiment that has been created that the monsoon this year has not been so good, and the rice production is going to get impacted, whereas the figures that we are getting from the agriculture department show that there (will be a) bumper crop. So there is no apprehension of any shortages happening in the paddy production, in the rice production in the Kharif season.”

He added, “The crop situation is good, the production will be good, and whatever action we have taken in terms of the curbs on exports…I think had we not undertaken those curbs, the price rise would have been much more. So this 10% you are saying, would have been much more had we not intervened in the time that we did, to ensure that the non-Basmati rice exports are banned and the parboiled rice export also is regulated.”

There has been some relief in the prices of edible oils with rates being at record lows in the months of May and June. “The stocks today of the edible oils in the country, which have been imported, is about 37 lakh tonnes, compared to 23 lakh tonnes a year ago. We have an excess stock of 14 lakh tonnes, as a result of which we do not foresee any shortages or any increase in prices in the coming season,” the Food Secretary said.

Does the government apprehend food inflation to rise further in the upcoming festive season? “In the upcoming festive season, I do not see any of the prices of the commodities that we deal with — whether it is wheat, rice, sugar, or edible oils — to see any kind of a sharp upswing. We are taking corrective actions whenever it is required like today,” Chopra said.