Flour prices rise 20% as wheat gets dearer

The unusual increase in the prices of wheat has led to atta prices rising by about 20 per cent in markets across the country. The retail price of chakki atta has increased from Rs 11-12 a kg in May to Rs 14-16 a kg.

This is in line with the rising wheat prices that have jumped by about Rs 100 a quintal over the last one month.

In Delhi, wholesale wheat is quoting at about Rs 1,000 a quintal. At the Multi Commodity Exchange (MCX), the spot price of wheat has increased from Rs 882 a quintal a month ago to Rs 990 a quintal.

With the rising wheat prices, commodities like maida, darra and suji are also likely to be affected. The price of bread, biscuits, pasta and noodles is also expected to rise in the coming months.

"Companies manufacturing atta, pasta, biscuits, noodles, etc would take advantage of the rising wheat prices by increasing the price of these products and this is not unusual," said Vinod Kapoor, president, Wheat Products Promotion Society.

"The flour millers are delaying import of wheat, as they are anticipating a zero duty on wheat imports. Moreover, the quality of wheat that is being imported on private account in southern states is reported to be low," said Veena Sharma, joint secretary, Roller Flour Millers' Federation of India.

This wheat needs to be blended with domestic wheat before processing, she added.

A source in the industry said the food ministry has made a recommendation for making the private import of wheat duty free so that the imports pick up and the rising prices get curbed. However, no decision has been taken so far.

On June 28, the government had reduced the wheat import duty from 50 per cent to 5 per cent for the remaining period of the year.

The international wheat prices that were quoted in the range of $180 and $190 a tonne (cost and freight) in July are in the range of $210 and $225 a tonne. Wheat for October delivery at the MCX is trading at Rs 1,025 a quintal as against Rs 915 at the beginning of the month.

"As of now, we have not raised the price of bread and biscuit, but if the wheat prices do not ease, we would have to hike our selling price," said H K Batra, president, All India Bread Manufacturers' Association.

The government managed to procure about 92 lakh tonne of wheat this year as against 147 lakh tonne last year.

Consequently, it decided to import 39 lakh tonne of wheat for the purpose of public distribution. Wheat stock in central pool as on August 11 was 69.4 lakh tonne as against the buffer stock norm of 171 lakh tonnne.

The government had, in the previous years, intervened in the market to moderate the open market price. But with lower stocks this year, the government would not be able to impact the market price.

Meanwhile, the Minerals and Metals Trading Corporation (MMTC) has cancelled the wheat import tender floated on August 8, informed an official source. The corporation had invited offers for importing 1.05-1.20 lakh tonne of wheat.

Germany-based AC Toefer had offered to supply about 1.25 lakh tonne wheat at a price ranging from $219-227 per tonne, C&F. The high price seem to be the reason behind the cancellation of the tender.

Meanwhile, India will have to import more wheat to feed its more than a billion people before the next crop in March, minister of state for food and consumer affairs Akhilesh Prasad said on Monday.

India has contracted purchases of 3.8 million tonne since March this year, the first wheat imports in six years, after a sharp fall in domestic output. "We will have to import more," Singh said.

The quantity needed is yet to be finalised, he added.

Procurement agencies have managed to buy only 9.2 million tonne of wheat from domestic farmers this year, compared with original estimates of 16.2 million tonne as the prices had soared above those offered by the agencies.

India, with the world's largest population after China, needs to maintain a buffer stock to ensure adequate supplies for the country's poor and to keep market prices in check.

Government stocks of wheat were estimated at 8.2 million tonne on July 1, nearly 9 million tonne lower than the required level of 17.1 million tonne at that date.