As key state elections approach, the central government made several significant decisions on Friday, including the removal of the Minimum Export Price (MEP) for basmati rice and onions, while simultaneously tightening stock limits on wheat. The MEP for basmati rice, initially set at $1,200 per tonne last year and later reduced to $950 per tonne, has now been lifted. This move comes as basmati rice prices have dropped by over ₹1,000 per quintal in major producing regions like Haryana and Punjab. Farmers in these areas have been urging the government to lift the export cap to increase overseas sales, especially with Haryana’s state elections around the corner. For onions, the MEP was fixed at $550 per tonne. With prices stabilizing in domestic markets and pressure from farmers in Maharashtra, a major onion-growing state heading to elections, the government decided to remove the export cap. Globally, onion shortages have created opportunities for Indian farmers to achieve better prices. The decline in onion prices was a key factor contributing to the underwhelming performance of the BJP-led government in Maharashtra during the 2024 General Elections.

Tightening of Wheat Stock Limits

In another crucial decision, the government has further tightened the stock limits on wheat. Traders can now only hold 2,000 metric tonnes, down from the previous limit of 3,000 metric tonnes. Similarly, wheat processors, including biscuit and bread manufacturers, now face a reduced stock limit of 60% of their monthly installed capacity, as opposed to the earlier 70%. The move comes as domestic wheat prices have risen to ₹2,700 per quintal due to high demand in the run-up to festival season. However, some industry experts argue that the current wheat prices are reasonable, given the steady rise in the Minimum Support Price (MSP) and additional bonuses promised by key wheat-producing states like Madhya Pradesh and Rajasthan ahead of elections. These decisions reflect the government's focus on balancing domestic market stability while addressing concerns from farmers, particularly in poll-bound states.