Buoyed by a sharp increase in minimum support price and stable retail prices, which has discouraged private buying, government’s wheat procurement in the new crop season that began on April 1 has started on a high note.

Till date, Food Corporation of India (FCI) and state procurement agencies have already purchased more than 1.7 million tonne of wheat from key producing states like Punjab and Haryana, while the total arrivals till now has been more than 1.8 million tonne.

The procurement is much higher than last year’s 2,11,000 tonne during the same period. Officials said that if the trend continues, India’s wheat purchases in 2009-10 could break last year’s record of over 22 million tonne. According to the latest data, out of the total wheat arrival of 9.4 lakh tonne in Haryana, government agencies have purchased almost the entire amount. Similarly, procurement in Punjab is more than 2.5 lakh tonne against the arrival of similar quantity.

However, during the same period last year, lifting of wheat from Haryana and Punjab was only 8,694 tonne and 30 tonne respectively. The government had earlier announced a minimum support price of Rs 1,080 per quintal for the rabi marketing season.

According to sources, FCI has started the new procurement season with reserves of more than 11 million tonne on April 1st, 2009 against 7 million tonnes last year.

The massive inventory added to the new purchases has aggravated the storage crisis. FCI may request the state governments to create additional capacities through private participation to the tune of 9 million tonnes in Haryana and Punjab.

Due to the recent spell of rains in northern India, there was apprehension that wheat output in Haryana and Punjab, which produce more than 70% of wheat, could be adversely impacted.

However, more than normal lifting by agencies has put all apprehension of lower production to rest.

“There is no cause of worry, the output would be enough to meet country’s requirement,” Jag Shoran, director, Karnal-based directorate of wheat research, under the Indian Council of Agricultural Research, had said.

India is expected to produce close to the last year’s record level of 78.57 million tonne of wheat during the year. FCI has permanent (covered) storage facilities for 24 million tonne and another 10 million tonne of temporary capacity across the country.

Due to stable price and comfortable storage position, even the government’s initiative to sale two million tonne of wheat under the open market sale scheme (OMSS) launched in September 2008 have got lukewarm response from the states and bulk purchasers.