Gaurav Jain
Founder and CEO
AgPulse Analytica
Wheat holds a pivotal place in India’s agricultural economy, influencing food security, farmer livelihoods, and inflation alike. As one of the largest producers and consumers of wheat globally, India’s policy decisions regarding wheat production, pricing, and distribution have far-reaching implications. With the 2025 marketing season on the horizon, stakeholders—including policymakers, traders, and farmers—are closely monitoring production trends, domestic prices, and potential policy sponses. While early signs point to an increase in production, the market dynamics suggest that challenges in procurement, price control, and supply management will persist.
CURRENT ACREAGE AND PRODUCTION OUTLOOK
According to the latest data from the Indian Ministry of Agriculture, wheat acreage has increased by 1.7% year-on-year, as of early January. This rise in acreage, combined with favorable weather conditions across major wheat-growing regions, has led to an optimistic production forecast. For the rabi marketing season (RMS) 2025/26, AgPulse Yield model suggests a production of approximately 116.4 million metric tons (MMT), reflecting a 3% increase over the previous year.
India wheat SnD for MY 2025/26 from AgPulse estimates
While the projected increase in production is encouraging, it comes against the backdrop of rising domestic consumption. We believe that consumption will grow by 2 MMT, driven by population growth and increased demand for wheat-based products. This is a conservative estimate for demand growth in view of increased prices. If prices cool down, demand can increase by 4-5 MMT. This means that while production may rise, it may barely outpace demand, keeping supply tight.
RISING DOMESTIC PRICES
Despite the anticipated rise in production, India’s wheat market remains tense. Domestic prices have continued to rise, reflecting a shortage in the domestic market for the old crop, which is unlikely to be resolved until the new harvest arrives.
The primary reason for this price surge is the limited availability of wheat in private hands. Private traders and farmers, who play a crucial role in ensuring market liquidity, have reported low inventory levels. This growing demand-supply gap, coupled with reduced private stocks, has resulted in a sharp increase in wheat prices, raising concerns about inflation.
MARKET INTERVENTIONS
To counter soaring prices, the government has been actively using the Open Market Sale Scheme (OMSS). Under this scheme, the Food Corporation of India (FCI) sells wheat directly to bulk consumers and traders to stabilize market prices. Of the total 2.5 MMT of wheat announced for sale under OMSS, auctions for 500,000 metric tons (KMT) have already been conducted, with over 95% of the offered quantity being sold.
Chart shows Rabi acreage for wheat till January for past years
Despite these sales, market prices are soaring high. This indicates that OMSS interventions have been insufficient to provide any relief and to address the underlying supply constraints. Government may need to increase the quantity of wheat offered under OMSS in the coming weeks to further ease market pressures.
GOVERNMENT DISTRIBUTION SCHEMES AND PROCUREMENT GOALS
A significant portion of India’s wheat is distributed through various government welfare schemes, such as NFSA and PMGKAY, which ensures food security for millions of citizens. To support these schemes and maintain buffer stocks, the FCI procures wheat from farmers at the Minimum Support Price (MSP).
The balance sheet for the Food Corporation of India, based on AgPulse estimates.
To ensure smooth running of welfare schemes, maintain buffer stock and control domestic prices, we believe the government to set a procurement target of 30 MMT. Achieving this target, however, will not be easy. With market prices currently well above the MSP of INR 24.25 per kg, farmers are likely to prefer selling their produce to private traders who offer better returns. Historically, when market prices have exceeded the MSP, government procurement has struggled. Without sufficient procurement, the government risks depleting its buffer stocks, which could disrupt welfare schemes and exacerbate food inflation.
THE IMPORT DEBATE
Given the current production forecast of 116.4 MMT, the government has ruled out the possibility of wheat imports for now. India traditionally avoids wheat imports to protect domestic farmers from international competition. While, importing wheat could help stabilize domestic prices, it is seen as a last resort due to its political and economic implications. Imports could undermine domestic farmers by lowering market prices, leading to potential unrest in the farming community. Moreover, the logistical and financial costs of importing large quantities of wheat would place additional pressure on the exchequer.
With the current production forecast of 116.4 MMT for 2025/26, India doesn’t anticipate requiring an import program. The government maintains sufficient buffer stocks to potentially increase OMSS sales in February-March, which appears to be the preferred strategy for managing domestic prices rather than opening up imports. However, if domestic prices continue to rise and procurement falls short, the government may consider relaxing import barriers to stabilize the market.
In the likelihood of India opening imports of wheat, we expect to import around 2-5 MMT, which will boost wheat prices in international markets with additional demand. Majority of wheat imports will be from Australia for the sake of cost effectiveness and likeliness of the produce. Nonetheless, the likelihood of such a policy shift remains low.
WEATHER CONDITIONS AND PRODUCTION RISKS
Agricultural production in India is highly dependent on weather conditions, and wheat is no exception. While the current outlook remains positive, unforeseen weather events—such as unseasonal rainfall, frost, heat or pest outbreaks—could still pose a risk to the final harvest
In past years, as those of MY 2022/23, climate variability has emerged as a significant challenge for Indian agriculture. Even minor deviations from expected weather patterns can have a disproportionate impact on crop yields. As such, stakeholders will be closely watching weather developments over the coming months.
LOOKING AHEAD
The road ahead for India’s wheat sector is fraught with uncertainty. The current supply forecast for 2025/26, could help fill the pipeline and ease supply pressures. However, the real challenge lies in ensuring that this surplus reaches the FCI’s procurement channels rather than being absorbed by the private market at higher prices.
With market prices remaining significantly above MSP and private traders actively purchasing from farmers, the government’s procurement goals face considerable headwinds despite the projected increase in production.
The success of the upcoming procurement season will be crucial in determining the government’s ability to manage both food security and price stability. If the FCI can meet its procurement target, it will have greater flexibility in using OMSS to stabilize the market. However, if procurement falls short, the government may face difficult choices, including the possibility of imports.
Conclusion
India’s wheat sector is at a critical juncture. While production is expected to rise, the market dynamics indicate that challenges in procurement and price control will persist. The coming months will be pivotal in shaping the country’s wheat policy and market trajectory.
For now, policymakers, traders, and farmers will continue to monitor the situation closely, knowing that every decision—from procurement strategies to market interventions—will have far-reaching consequences for food security and inflation. As the story of the 2025 wheat marketing season unfolds, it remains to be seen whether India can successfully navigate the challenges ahead or whether further policy adjustments will be required.
About the Author
Gaurav Jain, Founder and CEO of AgPulse Analytica, is a distinguished figure in global agricultural research. With a track record of providing exclusive insights to trade powerhouses, he established AgPulse Analytica in 2020 and in the past four years, he has become a trusted partner to industry leaders across 20 countries. Gaurav is a member of the GPC Pulse Atlas Committee and a prolific contributor to Pulse Pod. A valued member of GAFTA, he shares his expertise through GaftaWorld. Invited to prestigious conferences worldwide, including GPC events, Global Grain and GrainCom, Gaurav is known for his inclusive approach and unmatched global perspective in agricultural analysis. His work has established him as an influential expert in agricultural research.