Ministry to examine reasons for sudden spurt in food prices

Govt foodgrains stocks as on Sept 1 was estimated to be around 59 million tonnes, 85% more than the required quantity

As food inflation threatens to touch 20% largely because of high price of cereals and vegetables, food minister K V Thomas today said that government is examining the reasons for sudden and sharp increase in price of foodgrains despite bumper harvest.

He also said that henceforth small flour millers will be able to purchase foodgrains from FCI warehouses located in any part of the country not just in Punjab and Haryana by just paying the freight charge and reserve price.

Thomas’ comment on food inflation assume significance in the light of reports that massive grains stocking by state agencies has pushed up retail price of wheat and rice.

As per the WPI index, food inflation rose sharply to 18.18% in August, while the general inflation increased to 6.1% in the same period. WPI inflation in rice was at 20.13%, while it stood at 7.6% in wheat in the same month.

However, government foodgrains stocks as on September 1 was estimated to be around 59 million tonnes, 85% more than the required quantity.

"Prices of foodgrains have been rising despite good production and storage in the last few years. We are analyzing that. We will find out reasons behind undue inflation in foodgrains," the minister said, while addressing the 73rd annual general meeting of Roller Flour Millers' Federation of India.

Meanwhile, as per the new norms for bulk buyers of wheat will henceforth be allowed to purchase wheat from any part of the country by just paying the freight charge and reserve price. Of this around 1 million tonnes of wheat will be sold to the small flour millers without any tender.

“I hope that measures taken by the Government will keep the market prices under control and help bulk consumers in maintaining their operation as they can source their wheat requirement from the FCI at reasonable prices,” Thomas said.

In 2013-14, government has allowed sale of around 10 million tonnes of wheat from FCI godowns for bulk traders. Of this, the norms have been eased for 8.5 million tonnes of wheat.

He also said henceforth, a Committee of Secretaries (CoS) will decide on the base price and applicable freight for wheat to be sold in the open market from government warehouses and thereafter cabinet will be apprised of the same.

Country's foodgrain production was at 255.36 million tonnes last year, of which wheat stood at 92.46 million tonnes. Foodgrain production is expected to be at a record level this year on account of a better monsoon.