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India's cereal stocks cycle up and down, but typically exceed targets

  • by Maurice Landes
  • 8/22/2014
  • Countries & Regions
Chart showing Government cereal stocks and stock targets in Indi

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India’s government cereal stocks cycle up and down, but typically exceed government targets set to ensure adequate supplies for domestic distribution programs and provide a strategic reserve. Cereals in government stocks are procured from growers at annually revised minimum support prices (MSPs). Most procured cereals are distributed at subsidized rates through the Targeted Public Distribution System and other programs, with residual supplies accumulating in government-held stocks. The peaks and valleys in government cereal stocks are associated with cycles in price incentives due to changes in MSPs. Relatively low stocks and large increases in MSPs in the late 1990s led to a stock buildup by the early 2000s, and low stocks in the mid-2000s, combined with rising world prices, led to higher MSPs and another stock buildup beginning in the late 2000s. Price policy announced for 2014/15 crops so far indicates relatively small nominal increases in wheat and rice MSPs. For additional information see Indian Wheat and Rice Sector Policies and Implications of Reform.

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