Contrary to expectations, the decision to impose stock limit on wheat in the season itself

29-May-2025 12:25 PM

New Delhi. Generally, the government imposes a storage limit on wheat during the off-season when domestic prices are high and supply is tight, with the aim of increasing availability and controlling prices.

However, this year the stock limit order has been implemented during the peak arrival season itself, creating an atmosphere of panic in the market.

This year, the government successfully procured the highest quantity of wheat in the last four years, and a significant stock was already available in the central pool.

This has strengthened wheat availability in government warehouses. While the government could have released its own stock to improve market supply, it is instead choosing to hold this reserve for the coming months.

The strategy is to bring the wheat held by private traders and stockists into the market first, and only then utilize the government’s reserve.

The official wheat procurement season runs from April to June. Though May is not yet over, government procurement has largely ended. While wheat arrivals continue in wholesale markets, government procurement centres have mostly shut down in Punjab, Haryana, and Madhya Pradesh.

Centres in Uttar Pradesh and Rajasthan remain open, but arrivals there are minimal. Over 297 lakh tonnes of wheat have already been procured by government agencies.

With the imposition of the stock limit, traders and stockists may incur losses as many of them purchased wheat at prices higher than the minimum support price.

Another concern is that they have been given only 15 days to release excess wheat into the market, whereas in previous years, a one-month period was allowed.

There is a growing sentiment that the government initially encourages traders to buy and store wheat, only to tighten regulations soon after, which leads to uncertainty and financial stress for private players.