In recent years, there has been a cloud of uncertainty over wheat output estimates. These have cropped up in the wake of the premature onset of summer and its impact on wheat yields. The trade and other stakeholders have now contested the Ministry of Agriculture’s recent estimates for 2024-25. While there are few reliable indications at this stage to suggest that wheat output has been impacted yet again by high temperatures, the fact is that any such uncertainty creates ground for speculation, stock accumulation and price rise.
The Centre has pegged wheat production at 115 million tonnes (mt), higher than the estimate of 110 mt put out by the Roller Flour Millers Federation of India a fortnight ago. A section of the trade is unwilling to accept either of these estimates, its estimate being 104-106 mt. Reports in this newspaper suggest that output could exceed last year’s 113.29 mt, with the crop being good in most growing States, barring a few districts in Rajasthan. While releasing the kharif crop estimate in November 2024, the Centre said it had incorporated the digital crop survey (DCS) for the first time. It was deployed for crop estimates in Uttar Pradesh, Madhya Pradesh, Gujarat and Odisha. It is not clear whether DCS was used for rabi estimates.
When unseasonal rain and heat impacted the wheat crop in FY22 and FY23, production was pegged at 107.74 mt and 110.55 mt, respectively. Millers, in particular, had a tough time early last year in getting supplies, persuading them to question the estimates. The trade was of the view that the crop was lower than 100 mt in both years. There are, however, a couple of dimensions to this conundrum. First, the consumption of wheat could be rising at a quicker rate than what is generally assumed. A section of the trade pegs consumption at 9 mt a month, which amounts to 108 mt annually. Changing lifestyles and health awareness have led to a rise in wheat consumption. Wheat prices are averaging over ₹32 a kg in retail outlets, up ₹2 from a year ago. Second, wheat, rice, and maize supplies are getting tighter as 16 mt of grains are used to make ethanol.
The impact of higher demand on inventories is not clear. While stocks in the central pool, at 13.41 mt, are above the April buffer norm of 7.5 mt , the Centre plans to procure about 31 mt this season, 26 per cent above last year, perhaps an indication that demand is a bit of an unknown quantity. Meanwhile, private stock limits were reduced last month, but the merits of such steps are debatable. Finally, better information will lead to smooth functioning of markets, benefitting all stakeholders. The noise over estimates must be nipped in the bud, at a time when technologies are available to reduce the margin of error to a minimum. As for calls to lower the 40 per cent import levy, these are surely premature now, and would hurt growers. To start with, the Centre should call a stakeholders’ meeting, including States, and come out with a consensus estimate of wheat output.
