Wheat prices in India surged to a record high on January 6 due to a supply shortage, putting pressure on flour mills that are struggling to secure enough grain to operate at full capacity. Industry officials reported that even with the increased prices, mills are unable to meet their demand.
The rise in wheat prices is expected to drive up retail inflation, which had eased in November following a spike in October. The surge in costs may also influence the central bank’s decisions regarding interest rates.
Ajay Goyal, managing director of Shivaji Roller Flour Mills, noted that limited wheat supplies are preventing mills from functioning optimally despite paying higher prices. In response to the tight supply, the Indian government has imposed stock limits on traders and millers in December to improve availability. However, these measures have not been effective in lowering prices, which have climbed to approximately 33,000 rupees ($384.66) per metric ton in New Delhi, up from 24,500 rupees in April. Pramod Kumar, a flour miller, pointed out that the government’s stock limits failed to ease the supply issues, as private traders have few supplies available. The government has been selling 100,000 metric tons of wheat weekly from its reserves, but this amount is not sufficient to meet the growing demand.
The surge in wheat prices comes amid ongoing farmer protests in India, where agricultural reform laws are at the centre of widespread unrest. Farmers argue that the new laws, which they fear will weaken minimum price guarantees and empower large corporations, are threatening their livelihoods. These protests have disrupted agricultural supply chains, including wheat, and could be contributing to the supply shortages affecting the milling industry.
The Food Corporation of India (FCI) is expected to sell 2.5 million tons of wheat to bulk consumers by March 2025, a significant reduction from nearly 10 million tons in the previous season. The limited surplus in FCI warehouses, totalling 20.6 million tons as of December, is preventing the release of more wheat to private buyers.
