April 17 (Bloomberg) -- India, the world's second-biggest wheat grower behind China, has bought 7 percent more wheat from farmers this year to bolster state reserves that may be used to curb inflation running near a three-year high.

Food Corp. and other state-firms bought 3.1 million metric tons of wheat from farmers since April 1 and total purchases may reach a target of 15 million tons, Food Corp. Chairman Alok Sinha said in a phone interview from New Delhi today. The firms bought 89 percent of the grain marketed during the same period, compared with 71 percent a year ago, he said.

Higher wheat stockpiles may reduce pressure on India's government to import the grain at prices which reached a record in February and rein in inflation fueled by the rising cost of staple foods. India's inflation rose 7.14 percent in the week ended April 5 from a year earlier.

``India will have comfortable wheat stocks this year,'' Sinha said. ``Increased prices for farmers and the absence of private traders from the market have helped higher procurement.''

The government, which buys food grains at guaranteed prices from farmers for distribution to the poor at subsidized rates, increased the assured price for wheat 18 percent to 10,000 rupees a ton this year. Wheat, harvested in March and April, accounts for 73 percent of India's winter food grain output.

Production, Imports

The government has also asked private traders to notify details of any wheat purchased on a weekly basis to prevent hoarding of the grain.

``Government purchases were lower last year as private traders bought wheat to profit from an increase in prices,'' Sinha said. ``They are saddled with at least 1.5 million tons of wheat today and they won't be buying more than they need.''

India's wheat output may decline 1 million tons to 74.81 million tons in the March-April harvest because of a drop in acreage, the government said in February. Favorable weather has since improved crop prospects. Agriculture Minister Sharad Pawar said yesterday output will top 75 million tons, reducing the need for immediate imports.

India's government imported 1.8 million tons of wheat last year to build reserves and meet emergencies. The South Asian nation may import 2 million tons this year, Atul Chaturvedi, president at Adani Enterprises Ltd., India's biggest private exporter of farm goods, said last week.

India's West Bengal state has invited bids to import 186,000 tons of wheat, West Bengal Essential Commodities Supply Corp. said in an advertisement published in the Economic Times newspaper on April 13.

Rice Purchases

Government agencies may purchase 27 million tons of rice by Sept. 30, 2 million tons more than last year, Food Corp.'s Sinha said. India has banned exports of rice and set a minimum export price of $1,200 per ton for shipment of aromatic basmati rice to boost local supplies.

Rough rice prices have more than doubled on the Chicago Board of Trade in the past year, threatening food security across Asia. Leading exporters of the cereal such as China, Vietnam and Egypt are curbing supplies.

``The rice situation is quite comfortable,'' Sinha said. ``We are better placed than last year.''

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

Last Updated: April 17, 2008 03:45 EDT