Punjab farmers hold on to wheat stocks for better price realisation

Written by Sandip Das | New Delhi | Updated: May 15 2013, 06:53am hrs
In anticipation of better price realisation in winter months, Punjab farmers are holding on to part of their harvests this year, leading to a fall in wheat arrivals in various mandis across the key foodgrain growing state, an official with the states agriculture department said on Tuesday.

Wheat output in Punjab during 2012-13 is expected to decline by 8-10% because of unseasonal rains just before harvesting began in the state, the official said.

MS Sandhu, director of the agriculture department Punjab, told FE that due to expected better price realisation and purchase from the flour millers, wheat arrivals have declined in the state, which remains the biggest contributor to the central pool.

Last year, Punjab had achieved a record wheat harvest of 15 million tonne (mt), of which the Food Corporation of India (FCI) purchased close to 13 mt and the rest was used for the consumption in the state. This year, on the commencement of the wheat marketing season on 1 April, the state had set a record target of 14 mt, which was later revised following lower arrivals at mandis.

We have managed to match the requirement of the wheat procurement trend over the last many years. Last year was exceptionally good as far as output goes, Sandhu noted.

He said that because of huge procurement by FCI last year (at close to 39 mt), which was about 40% of the country's total wheat output, prices went up during winter months. This year, big farmers have been holding on to stocks in anticipation of price appreciation during the forthcoming winter months, Sandhu said.

Many four millers have also started buying directly from farmers this year in Punjab as, for the last few years, they had been going to as far as central UP to get their stocks. Higher taxation in Punjab (14.5%) was making the foodgrain costly.

During last years winter, the wholesale price of wheat crossed R1,500-R1,600 per quintal against an MSP of R1,280 per quintal and, subsequently, FCI also did not release excess wheat at lower prices through its Open Market Sale Scheme (OMSS).

This year we have have been proactive in buying from farmers as last year we faced a huge supply crunch because of huge purchases by the government, a Chandigarh-based flour miller said.