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Why sugar & wheat are the main food inflation worries now

2 min read

Rabi Crop Concerns: Wheat and Sugar

The current state of rabi (winter-spring) crop production in India highlights concerns particularly with wheat and sugar, both crucial for assessing food inflation risks.

Wheat: Managing Stocks

  • Opening Stocks: The opening stocks of wheat on April 1 last year were at 75.02 lakh tonnes, the lowest since 2008, barely above the required buffer of 74.6 lakh tonnes. 
  • Government Strategy: A record 100.88 lakh tonnes of wheat were offloaded from the Food Corporation of India’s stocks during 2023-24 to moderate prices, especially before the Lok Sabha elections. 
  • Current Procurement: The government has procured 266 lakh tonnes, which is above the previous two years but below earlier years' averages. 
  • Market Prices: Wheat is currently wholesaling at higher prices than the previous year, indicating a possible inflation concern. 
  • Temperature Effects: Wheat yields depend on temperature; current conditions suggest a potentially good yield, especially in central India, with expected 15-20% higher yields in Madhya Pradesh compared to last year. 

Sugar: Production Challenges

  • Initial Production Estimates: The Indian Sugar & Bio-Energy Manufacturers Association initially estimated gross production at 333 lakh tonnes for 2024-25, later revised downwards. 
  • Current Production Figures: Net production as of February 28 was only 220 lakh tonnes compared to 255 lakh tonnes the previous year. 
  • Industry Outlook: Latest estimates suggest a net production of around 265 lakh tonnes, with closing stocks potentially insufficient to meet post-harvest demand. 
  • Price Trends: Ex-factory sugar prices have increased from last year, with potential government interventions like stock limits or facilitating imports. 
  • Production Issues: Factors such as subpar rainfall in Maharashtra and Karnataka and increased susceptibility of sugarcane in UP to diseases have impacted production. 
  • Tags :
  • Rabi Crop Concerns
  • Managing Stocks
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