Procurement plunge casts shadow over food Bill

Written by Sandip Das | New Delhi | Updated: May 17 2013, 08:37am hrs
Despite the government hiking its estimate of wheat production by around a million tonnes to a likely 93.62 million tonnes (mt) for 2013, the sharp fall in procurement suggests the government may have to revise the output. Based on figures till May 16, procurement levels are already lower than last years by 5.5 mt. Compared with 29.7 mt till May 16, 2012, just 24.2 mt of wheat were procured in the same period this year.

With just a few weeks left for procurement, FCI sources say they will be lucky to reach even 30 mt. At that figure, this means a 21% fall in a year where output is just 8 lakh tonnes less than last year (see graphic). This target compares poorly with the food ministrys original target, in April, of 44 mt, which was later revised early this month to 33 mt.

While the US department of agriculture has revised its outlook for Indias wheat crop for the year to 92 mt, FCI sources say USDA may further reduce its outlook.

Though lower procurement will help contain the food subsidy bill, it creates problems as far as the food security bill is concerned since larger quantities of both wheat and rice will be required. For sustaining food grain requirement under the proposed food security legislation and maintaining buffer stocks, the government agencies need to procure at least 35 million of wheat annually.

With farmers bringing wheat to mandis slowing down considerably during the last few days, we could even fall well below 30 mt, an FCI official said on condition of anonymity. Amar Singh, chairman and managing director of FCI did not respond to FEs call.

During the last few days, daily wheat arrivals at around 3000 mandis across key wheat-producing states including Punjab, Haryana, Madhya Pradesh and Rajasthan have dropped to only about 1.3 lakh tonnes against close to 4 lakh tonnes reported during same period last year.

It is shocking to see procurement estimates tumbling from 44 mt in early April to 40 mt by April-end to 33 mt by May 15, and now, it would be around 26-28 mt. How can we plan our national food security legislation on such shaky procurement estimates wondered Ashok Gulati, chairman,Commission for Agricultural Costs and Prices.

MS Sandhu, director of agriculture, Punjab government said the wheat output in the state, the biggest contributor to the central pool, is expected to fall around 8% to 10% because of unseasonal rains before harvest. Last year, Punjab had a record wheat harvest of 15 mt, out of which the government had purchased close to 13 mt and rest was used for consumption in the state.

He said due to expected better price realisation in coming winter months and purchase from flour millers, wheat arrivals have declined in the state, which remains the biggest contributor to the central pool.

Till now, Punjab and Haryana have contributed 10.7 mt and 5.8 mt respectively to the central pool. At present, other key contributors to the central pool has been states such as Madhya Pradesh (5.8 mt), Rajasthan (1 mt) and Uttar Pradesh (5 lakh tonne).