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Why did the government impose a ceiling on wheat stocks?

The article highlights the Union Government’s efforts to stabilize wheat prices and prevent hoarding in order to ensure food security. It discusses the imposition of stock limits for traders, wholesalers, retailers, and processors. Additionally, it mentions the government’s plan to offload wheat through the Open Market Sale Scheme (OMSS) and addresses concerns about decreased wheat production due to adverse weather conditions. The article emphasizes the need for monitoring stock levels, market dynamics, and weather patterns to effectively manage the wheat market for food security.

Introduction:

The Union Government of India recently took steps to prevent hoarding and unscrupulous speculation in the wheat market for food security. These measures aim to stabilize the price of wheat, an essential commodity, by ensuring a steady supply. In addition, the government plans to offload wheat from the central pool through the Open Market Sale Scheme (OMSS) and potentially release more based on prices and demand. However, concerns have arisen due to lower wheat production caused by unseasonal rains, hailstorms, and hotter temperatures in key wheat-producing states.

Limits on Stock Holding:

To address the issue of hoarding, the government imposed limits on the stock of wheat that traders, wholesalers, retailers, big chain retailers, and processors can hold. The government allows traders and wholesalers to hold up to 3,000 metric tonnes, while retailers and big chain retailers can store up to 10 metric tonnes at each outlet. Processors are permitted to stock 75% of their annual installed capacity. These entities must declare their stock positions and regularly update them on the Department of Food and Public Distribution’s portal. If their stock exceeds the prescribed limits, they have 30 days to bring it under control.

Offloading Wheat through OMSS:

The government will sell 15 lakh tonnes of wheat from the central pool via the OMSS. The government will e-auction it to flour mills, traders, buyers, and wheat product manufacturers. They will sell wheat in lot sizes of 10 to 100 metric tonnes. This is the first tranche, and they may release more based on prices and demand. Additionally, the government plans to offload rice under the OMSS to moderate prices.

Concerns over Decreased Production:

Unseasonal rains, hailstorms, and high temperatures reduced wheat output. The India Meteorological Department predicted adverse effects on crops. Thunderstorms, lightning, and hailstorms damaged wheat in Punjab, Uttar Pradesh, Madhya Pradesh, and Haryana. Experts estimate 5.23 lakh hectares were affected. Waterlogging and lodging impacted crop yield.

Analysis of Production and Stock Levels:

The Ministry of Agriculture estimates a record wheat production of 1,127.43 lakh metric tonnes for 2022-23. It increased by 50.01 lakh metric tonnes compared to the previous year. Larger cultivation areas and higher yield contribute to the optimism. However, concerns arise regarding government procurement due to slower purchases caused by rising local prices. As of June, the central stock had 313.9 lakh metric tonnes, slightly higher than the previous year.

Conclusion:

The government aims to stabilize wheat prices and prevent hoarding for food security. They impose stock limits and offload wheat through the OMSS to control retail prices. However, concerns arise from decreased wheat production due to adverse weather conditions. The impact on availability and affordability of wheat remains uncertain, especially for vulnerable sections. Close monitoring of stock levels, market dynamics, and weather patterns is crucial for effective wheat market management.

Possible UPSC CSE Mains Questions (Set 1)
  1. Discuss the steps taken by the Union Government of India to prevent hoarding and speculation in the wheat market for food security. How do these measures aim to stabilize wheat prices?
  2. Examine the significance of the Open Market Sale Scheme (OMSS) in the context of offloading wheat from the central pool. How does it contribute to price moderation and market stability?
  3. Assess the impact of unseasonal rains, hailstorms, and hotter temperatures on wheat production in key wheat-producing states. Analyze the measures that can be undertaken to mitigate the adverse effects of such weather conditions on agricultural output.
  4. Evaluate the effectiveness of stock limits imposed by the government on traders, wholesalers, retailers, big chain retailers, and processors to address the issue of hoarding. Discuss the rationale behind different stock holding limits for various entities involved in the wheat market.
  5. Critically analyze the role of e-auctioning in the Open Market Sale Scheme (OMSS) for wheat. How does this process ensure transparency, fair competition, and optimal price realization?
Possible UPSC CSE Mains Questions (Set 2)
  1. Discuss the challenges faced by wheat farmers in Punjab, Uttar Pradesh, Madhya Pradesh, and Haryana due to thunderstorms, lightning, hailstorms, waterlogging, and lodging. Suggest measures to enhance their resilience and protect their livelihoods in the face of such climatic adversities.
  2. Examine the reasons behind slower government procurement of wheat caused by rising local prices. What measures can be adopted to ensure timely and adequate procurement for the central pool, considering the concerns of both farmers and consumers?
  3. Analyze the impact of decreased wheat production on the availability and affordability of wheat, particularly for vulnerable sections of society. What strategies can be implemented to ensure food security and mitigate the potential consequences of reduced wheat output?
  4. Evaluate the role of close monitoring of stock levels, market dynamics, and weather patterns in effective wheat market management. Discuss the importance of data-driven decision-making in ensuring stability and resilience in the wheat sector.
  5. Assess the measures taken by the Union Government of India to prevent hoarding and speculation in essential commodities like wheat. How do these measures contribute to overall food security and price stability in the country?

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