Centre gears up to procure wheat; MP announces bonus

As the country is expecting bumper wheat production for the third successive year, state agencies are gearing up for the annual procurement drive which is expected to commence in full swing from April 1.

According to official sources, wheat procurement under the decentralised scheme is expected to start in Madhya Pradesh and Gujarat next week, a good fortnight before the normal procurement season, because of early harvest.

The government is hoping to procure around 24 million tonne of wheat in the coming rabi marketing season. The Food Corporation of India (FCI) and states agencies procured above 25 million tonne last year.

The government has increased the minimum support price of wheat to Rs 1,100 per quintal from Rs 1080. In addition to that, the Madhya Pradesh government last week announced an extra bonus of Rs 100 per quintal to farmers selling wheat to the state procurement agencies.

Official sources told FE that the state governments and the FCI needs to create extra space for arrival of new wheat crop as the government has an estimated carryover stocks of close to 18 million tonne at present, which is far above compared with the previous year. It also exceeds the strategic and buffer stocks norms of 10 million tonne.

Punjab, at present, has 6.7 million tonne of wheat stocks while Haryana has more than 4.6 million tonne from the previous year?s procurement.

The FCI and state agencies have targeted procuring more than 11.5 million tonne of wheat in Punjab this year, while another 7 million tonne has been targeted for lifting in Haryana.

Meanwhile, the government has decided to wind up the Open Market Sale Scheme (OMSS) of wheat meant for bulk consumers in Punjab, Haryana and Uttar Pradesh from March 31. These three states contribute more than 90% of wheat procured to the central pool.

?We think that there are possibilities that wheat sold through the OMSS may get into procurement system again in these states as there is a small difference between MSP and OMSS prices,? sources said.

However, the OMSS, which aims to offload excess wheat stocks into the market for curbing price rise, would continue in those states which do not contribute substantially to the central pool.

The government had allocated 2.08 million tonne of wheat during October 2009 ? March 2010 for bulk buyers under the OMSS for curbing prices of wheat in the retail markets.

The high-level committee (HLC) set up by the food ministry has approved sale of 1.17 million tonne of wheat out. Of that, 1.13 million tonne have been lifted by private flour millers and bulk buyers.

In 2006-07, the FCI could only procure about 11 million tonne of wheat against the targeted 15 million tonne. In 2005-06, the government imported 5.5 million tonne of wheat as procurement level dropped to 9.2 million tonne.