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.
