Govt further cuts Wheat Stock limits, bans Onion Exports until...

Govt further cuts Wheat Stock limits, bans Onion Exports until March 2024

Dec. 9, 2023

Why in the News?

With an aim to increase domestic availability and keep prices in check, the Union Government has further lowered the limit of wheat that traders can hold.

What’s in Today’s Article?

Wheat Production in India:

Wheat is one of the main staple crops and is important for the food economy in India. It is the most consumed crop after rice by the Indian population.
When India gained independence in 1947, wheat output and productivity were extremely low.
Therefore, India used to import a large quantity of wheat from different nations to meet the country’s demands.
After the Green Revolution in the late sixties, wheat production in India became self-sufficient due to various government initiatives.
Currently, India is ranked third in global wheat production.
The wheat crop is cultivated in the Rabi (winter) season and harvested in the spring or summer season.
Moreover, there are about 448 varieties of wheat grown in India.

Wheat Producing States:

The northern states of Uttar Pradesh, Punjab, and Haryana are the main wheat producers of India.
About 107 million metric tons of wheat were produced in 2021 across the country.
In 2022, about 31 million hectares of wheat were cultivated and over 31 million hectares of wheat were harvested in the country.
Record-high prices and favourable weather conditions encouraged farmers to increase planting acreage and choose high-yielding varieties, leading to a record-high wheat production estimate in 2023.

Onion Production in India:

Onion is sown in all the States, however, Maharashtra is the leading producer with share of around 43%, Madhya Pradesh 16% , Karnataka & Gujarat contributing around 9% of national production.
It is harvested thrice a year, with cropping seasons reported during Kharif, Late Kharif and Rabi.
The harvest of Rabi is most important as it contributes nearly 72 -75% of national production and is harvested during March to May months.
The shelf life of Rabi harvest is highest and store-worthy whereas the Kharif and Late Kharif crop is for direct consumption and not store-worthy.
The timing of the harvest of onion across the country provides regular supply of fresh / stored onion all over the year.
But sometimes due to vagaries of weather, either the stored onion is spoilt or the sown area gets damaged leading to supply constraints and rise in the domestic prices.

News Summary:

With an aim to increase domestic availability and keep prices in check, the Union Government has further lowered the limit of wheat that traders can hold.
India has extended restrictions on the outbound shipments of onions until the end of this fiscal year or March 31, 2024, as the government seeks to ensure ample supply in the country.
- The exception to the ban on onion imports includes permission by the Government based on specific countries’ requests.
Wheat prices have remained elevated despite the Government last year banning exports following a shortfall in production and later imposing restrictions on stock.
As of November 1, the wheat stock in the central pool stood at 218.76 lakh metric tonnes (LMT), a little higher than 210.46 LMT on the same day last year.

What are the Current Permissible Stock Limits?

The permissible stock that traders/wholesalers can hold was 3,000 metric tonnes.
- It has been reduced to 1,000 metric tonnes now.
Retailers and big chain retailers can hold up to 10 metric tonnes at each of their outlets.
- It has been reduced to 5 metric tonnes at each of their outlets.
The mentioned entities are expected to declare their stock positions and update them regularly on the Department of Food and Public Distribution’s portal.
If the stock held by them are higher than the limit, they will have 30 days from the day of issue of notification to bring the same under the prescribed limits.