Wheat procurement may drop 27% on lower output, pvt buys

Written by Sandip Das | New Delhi | Updated: May 14 2013, 08:36am hrs
Total purchases likely to fall to 30 mt, short of even the lowered target of 33 mt

With only a few days to go before the end of the governments wheat procurement drive for the 2013-14 season in the key growing states of Punjab and Haryana, the total purchase from farmers is likely to fall to as low as 30 million tonne against the earlier target of a record 44 mt.

This would be a decline of 27% from the previous season's purchase of 38 mt by the Food Corporation of India (FCI) and state government- owned agencies.

Till Monday, the government has lifted 23.8 mt wheat under the procurement drive that formally commenced on April 1. Last year, during the same period, procurement had reached more than 28 mt.

The decline in production in Punjab and Haryana has contributed to the lower arrivals at mandis, an FCI official told FE. The official said that over the next one week, purchases by the corporation are expected to be completed in Punjab and Haryana. Till now, Punjab and Haryana have contributed 10.6 mt and 5.8 mt, respectively, to the central pool.

However, the decline in procurement is not expected to hamper availability of grain for the Public Distribution System (PDS) and buffer stocks and strategic reserves as the government has huge carry forward stocks, estimated at 22 mt, from the previous years.

At present, other key contributors to the central pool are Madhya Pradesh (5.8 mt), Uttar Pradesh (5.2 mt) and Rajasthan (9.9 lakh tonne).

Last year, Punjab was the biggest contributor to the central pool with a record 13 mt while this year the northern state is expected to contribute about 11 mt. Similarly, Haryana is expected to contribute only about 7 mt of wheat to the central procurement drive against 8.6 mt achieved last year.

Recently, the food ministry revised its wheat procurement target for the season to 33 mt and, according to the current trend, actual purchases could fall well short of this target as well.

Despite announcing an extra bonus of R150 per quintal on wheat procurement over and above the minimum support price of R1,350 per quintal, procurement in MP has not picked up with private traders purchasing directly from farmers. Recently, MP revised its wheat procurement target to 9 mt from 13 mt.

Private players, such as roller millers, have been buying wheat directly from farmers after the government had refused to sell excess wheat to them under the Open Market Sale Scheme (OMSS) at subsidised rates. Thus, to stock up, private traders have been active buyers in MP and UP.

Apart from the central agency FCI, wheat is also being purchased from farmers by state governments, cooperatives and others.

The government buys wheat from farmers at the minimum support price to meet demands under various welfare schemes such as the mid-day meal programme.