India’s central government has increased the reserve prices for wheat and rice sold from its strategic foodgrain reserves in 2024-25. This move aims to regulate supply and control food inflation while ensuring fair returns to farmers and efficient market functioning.
Reserve Price Increase Details
The Food Corporation of India (FCI) sells wheat and rice from the Central Pool under the Open Market Sale Scheme-Domestic (OMSS-D). The reserve price is the minimum price for these sales. For wheat, the reserve price was raised by about 11 per cent to Rs 2,550 per quintal. This price applies to all crop years including the current Rabi Marketing Season (RMS) 2025-26 and is valid until June 30, 2026. For rice, the reserve price increased by roughly 3 per cent to a range of Rs 2,320 to Rs 3,090 per quintal depending on the buyer category. These prices take effect from November 1, 2025, for private and cooperative buyers.
Price Variations by Buyer Type
Rice prices vary by buyer. Private parties and cooperatives pay Rs 2,890 per quintal for rice with 25% broken grains. State governments, their corporations, and ethanol distilleries pay Rs 2,320 per quintal. Custom milled rice (CMR) with 10% broken rice under the Rice Milling Transformation Scheme is priced at Rs 3,090 per quintal. Coarse grains such as bajra, ragi, jowar, and maize also saw reserve price increases.
Reasons Behind Price Hikes
The rice price increase aligns with the 3 per cent hike in the minimum support price (MSP) of paddy. Wheat’s reserve price rise exceeds its MSP increase. The MSP for wheat rose by 6.59 per cent to Rs 2,425 per quintal for RMS 2025-26. These adjustments aim to reflect market realities and support farmers amid record production.
Record Production and Procurement
Wheat production reached a record 117 million tonnes in 2024-25. Government procurement also rose, with 30 million tonnes procured by July 6, 2025, compared to 26.5 million tonnes last year. This surplus allows the government to offload stocks in the open market to stabilise prices.
Current Stock Levels and Market Impact
India’s rice and wheat stocks are at historic highs. As of June 1, 2025, 37.9 million tonnes of rice and 36.9 million tonnes of wheat were in the central pool. Additionally, 32.2 million tonnes of unmilled paddy and 0.45 million tonnes of coarse grains are available. With a favourable monsoon and increased sowing for the kharif season, the government can maintain steady supply and curb inflation through strategic sales.
Role of Food Corporation of India and Policy
FCI manages procurement, storage, and distribution of foodgrains through the Public Distribution System (PDS) and OMSS-D. The reserve price mechanism helps balance farmer income and consumer prices. E-auctions to private traders and cooperatives improve market efficiency and transparency.
Food Inflation and Supply Management
By raising reserve prices and releasing grains strategically, the government aims to control food inflation. The scheme ensures availability of cereals in the open market while preventing excessive price volatility. This contributes to food security and economic stability.
Questions for UPSC:
- Point out the significance of the Minimum Support Price (MSP) in India’s agricultural economy and its impact on food inflation.
- Critically analyse the role of the Food Corporation of India (FCI) in managing food security and market stability in India.
- What are the causes and consequences of foodgrain stock accumulation in India? Estimate its effects on farmers and consumers.
- Underline the challenges and strategies involved in balancing foodgrain procurement and open market sales in India’s Public Distribution System.
