The government?s dream run with regard to wheat procurement this year continues. Compared to the 11.1 million tonne it could procure last year, the procurement of wheat by the Food Corporation of India (FCI) and state agencies for the ongoing rabi season, is set to nearly double to a record 21 million tonne by the last week of May. By Wednesday, 19 million tonne of wheat had already been procured.

The record wheat procurement follows after two years of short-fall forcing the government to import wheat. The government had set a procurement target of 15 million tonne for the current year to ensure there?s enough wheat for the buffer stock and Public Distribution System (PDS). On Thursday, the ministry of agriculture stated that wheat procurement will continue as long as farmers offer wheat at the minimum support price of Rs 1000 per quintal.

The record procurement so far, has already had a calming impact on wheat prices which remained steady across various centers through the first two weeks of May. Since the last two weeks, the wheat prices have been in the range of Rs 1050 ? Rs 1155 a quintal.

The record procurement raises another key question ? about the ability of the FCI and state agencies to store the wheat properly, within the capacity of its existing go-downs. The comptroller auditor general has raised issues about the efficiency of wheat storage mechanisms in its recent audit reports.

However, a senior official with FCI on Thursday claim that there would not any problems relating to storage of such a huge quantity of wheat despite FCI having only 24 million tonne storage capacities. ?A storage crunch is not there at all as combined capacities of FCI and state agencies is close to 50 million tonne,? Alok Sinha, chairman & managing director of FCI told FE.

Sinha said that when wheat is procured, more than half of it is procured by state agencies as FCI?s ?partners?. ?They (state agencies) give the wheat to us gradually, while we pay them holding costs for the same,? he said.

On storage and transit losses of FCI, Sinha said that as FCI handles around 40 million tonne of foodgrains at any given point of time, the losses tend to look ?big?. But the losses have been coming down slowly and steadily. ?At the moment, the transit and storage losses are less than 0.4% which is better than most of the international firms,? he said.

Out of the total procurement this year, Punjab and Haryana have contributed more than 77% with Punjab contributing 9.6 million tonne and Haryana contributing more than 5.5 million tonne. Even states like Bihar , that typically contribute little to the government?s wheat stocks, have delivered 1.2 lakh tonne till date. Other states? contributions were: Uttar Pradesh 1.75 million tonne, Madhya Pradesh 1.55 million tonne, Rajasthan 0.12 million tonne and Gujarat 0.22 million tonne.

Union agriculture minister Sharad Pawar had recently said that wheat production is expected to be around 76.78 million tonne against 75.81 million tonne recorded last year. India imported more than 1.8 million tonne of wheat in 2007 as it could only procure about 11 million tonne against the target of 15 million tonne. Even in 2006, the wheat imports were to the tune of 5.5 million tonne as procurement level was low at 9.2 million tonne.