Retail wheat prices soar as government cuts back procurement

The working people in towns and cities across the country have been facing rising wheat prices since June 2022. The rise in the price of a staple like wheat has put a further burden on people, who are already facing the highest ever prices of LPG, petrol and diesel.

Graph gives data.

This is what happened in 2022 that caused wheat prices to soar. An MSP of Rs.2015 per quintal had been declared for the 2021-2022 wheat crop. However, the government procured very little of the wheat crop. On the other hand, capitalist traders and trading corporations were more than willing to buy from the kisans at a much higher rate, Rs. 2100 – Rs.2500 per quintal. The traders were willing to pay so much more than the MSP because they expected to sell their stocks at an even higher price. Wheat prices in the international market were ruling high due to the war in Ukraine. The capitalist traders and corporate houses took full advantage of the high wheat price in international markets, until the government announced an export ban in May 2022. The government was forced to call for a ban in the face of public uproar when retail prices started soaring in the domestic market. Wheat prices remained high even after the export ban. The big traders and trading corporations profited from the high prices ruling in the international and domestic market.

In sum, the government ensured that private wholesale traders made massive profits from selling wheat internationally and in the domestic market. It did so by not procuring wheat following the harvest in March-April 2022. Instead, it allowed the private trading companies and big traders to buy wheat directly from the kisans and sell it in the retail (international and domestic) market. It clearly acted in the interests of the private trading corporations and big wholesalers.

Bourgeois propaganda is that kisans who sold wheat to the private traders have made profits at the expense of the rest of the population The truth is that it is the traders who have made huge profits. While the kisans got a price higher than the MSP for their produce in 2022, their return was only a fraction of the profits made by the traders. Further, there is no guarantee of higher than MSP prices in every year; the kisans are at the mercy of volatile market conditions.

As per the data of Ministry of Consumer Affairs, Food and Public Distribution, wheat and atta (wheat flour) prices increased by more than 15% over the year January – December 2022. The all-India daily average retail price of atta touched a high of Rs. 35 per kg in mid-January 2023.

The government propaganda makes out that one of the causes of the rise in wheat price is due to the lower production of wheat during the rabi crop year October 2021-March 22. This is a lie. The wheat production had fallen only by about 30 lakh tonnes to 1068 lakh tonnes, i.e., a fall of less than 3 percent. This fall should not matter when the government had stocks of over 400 lakh tonnes of wheat in November 2021.

In 2022, the government did not add to its stock because it procured only 187 lakh tonnes, less than half of what it had procured in the previous year. Wheat stock with the government reduced to half, 210 lakh tonnes at the start of November 2022 from 420 lakh tonnes on November 1, 2021. It further reduced after the government released some stocks in January-February 2023. Wheat stock at the beginning of March 2023 is at 5-year low of 117 lakh tonnes only against the minimum 138 lakh tonnes stock that the government must have – on 1 January, 2023. In other words, it is a deliberate policy of the government to cut down the public procurement of wheat and allow private wholesale traders to make profits by buying wheat directly from the kisans.

These events clearly reveal that the Indian state does not recognise its obligation to ensure guaranteed procurement at remunerative prices to the kisans and affordable foodgrains to the masses of people. It works to serve the agenda set by big traders and monopoly corporate houses who want total control over procurement and distribution.

The economy has to be reoriented to change this situation and to fulfil the needs of masses of workers and peasants instead of the greed of a handful of monopoly capitalists. This is the demand of the workers and peasants. This can be fulfilled only if the state takes over food procurement, storage and distribution with the aim of securing the interests of the kisans and the working population in the cities.

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