1. Wheat purchase set to plunge 22% this season, but that’s not bad for farmers. Here’s why

Wheat purchase set to plunge 22% this season, but that’s not bad for farmers. Here’s why

This will be the lowest volume of procurement in last five years.

By: | Updated: May 20, 2016 7:47 AM
wheat-reu-L With procurement activities almost complete in the key producing states of Punjab, Haryana, Rajasthan and Madhya Pradesh, the total purchase this season would most likely to be around 23 mt, far lower than the target of 28 mt set by the government in the beginning of the purchase season. (Reuters)

The government’s wheat procurement in the ongoing rabi marketing season (2016-17) is set to decline sharply by more than 22% to 23 million tonnes (mt) from 28 mt achieved in the previous year. This will be the lowest volume of procurement in last five years.

Sources told FE that because of a decline in wheat procurement this year in Madhya Pradesh (by around 3 mt), mainly attributed to higher private-sector purchases from the southern region, the total purchase across the country has fallen to 22.71 mt till now.

With procurement activities almost complete in the key producing states of Punjab, Haryana, Rajasthan and Madhya Pradesh, the total purchase this season would most likely to be around 23 mt, far lower than the target of 28 mt set by the government in the beginning of the purchase season. “Whether we can meet the target will be known in the next couple of few weeks, but any drop in procurement would not impact our Public Distribution System and the retail prices would not go up, as we have more than adequate wheat stocks with FCI,” food minister Ram Vilas Paswan said.

wheat

On April 1, against the buffer stocks norm of 7.46 mt, FCI had a wheat stocks of 14.53 mt. If the current procurement of grain is added to the stocks, on July 1, against the buffer stocks of 27.58 mt required under the norm, FCI is expected to have around 33 mt of wheat.

Sources also said that the wheat purchase by the state government agency has declined mainly in Madhya Pradesh, where this year’s purchase has been 3.95 mt of wheat so far against 7.30 mt lifted in the 2015-16 season. In Madhya Pradesh, where most of the purchases by private-sector players happen because of its proximity to the southern and western regions, farmers have received a premium of around R150 a quintal for the normal variety of wheat above the minimum support price of R1,525 per quintal.

In Punjab and Haryana, the agencies have lifted more than 10.56 mt and 6.77 mt of wheat, respectively, from farmers so far. In Rajasthan, the state government has purchase only 7 lakh tonnes of wheat this year against 1.3 mt lifted in the previous season. Similarly in Uttar Pradesh, the state government agencies have lifted around 7 lakh tonnes of wheat against the arrival of more than 1 mt of grain in various mandis of the state.

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