Rabi wheat procurement down by half

Purchases of the grain by the Food Corporation of India (FCI) and other government agencies at the MSP stood at 17.59 million tonne (mt) on Sunday, down 47% from the year-ago level.

Last year, rabi wheat purchases by the government were at a record 43.34 mt.
Last year, rabi wheat purchases by the government were at a record 43.34 mt.

The government’s wheat procurement in the current year may be less than half the level last year, as market prices remain above the minimum support price (MSP) fixed by the government. Purchases of the grain by the Food Corporation of India (FCI) and other government agencies at the MSP stood at 17.59 million tonne (mt) on Sunday, down 47% from the year-ago level.

The procurement season is set to end soon.

Last year, rabi wheat purchases by the government were at a record 43.34 mt.

In Punjab, wheat procurement by government agencies ended with purchases of just 9.39 mt, down a quarter, on year. The target was 13 mt.

Purchases declined in other producing states like Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh.

In Haryana, 4.07 mt of wheat has been procured by agencies, while in Madhya Pradesh, more than 3.92 mt has been purchased from farmers under MSP operations. Last year, the volume of wheat procurement by government agencies in Haryana and Madhya Pradesh was 8.07 mt and 9.4 mt, respectively.

In other wheat-growing states like Uttar Pradesh, Rajasthan, Uttarakhand and Gujarat, the volume of grain procurement this year has been marginal. In Uttar Pradesh and Rajasthan, 1.9 mt and 1.1 mt of wheat was procured, respectively, a year ago.

Last week, food secretary Sudhanshu Pandey had said the lower wheat output, coupled with private purchase from farmers by exporters and traders holding on to the stocks, would lead to a 55% year-on-year decline in wheat procurement in the 2022-23 marketing year, to 19.5 mt. This means the purchases of the cereal by the government at MSP would hit a 13-year low this year.

On the lower volume of wheat procurement, the food ministry had cited factors such as farmers in Madhya Pradesh, Uttar Pradesh and Gujarat selling to traders and exporters at Rs 2,100-2,400 a quintal against the MSP of Rs 2,015 a quintal, and they are also holding some quantities, expecting higher prices of wheat after some months.

After the FCI’s wheat stock dropped to a five year low of 31 mt on May 1, the government last week had revised the grain allocation under the Pradhan Mantri Garib Kalyan Anna Yojana during May-September 2022, by providing more volume of rice than wheat.

The government has revised the estimate of wheat production in the 2021-22 crop year (July-June) to 105 mt, down from its February projection of 111.32 mt, based on reports that the early onset of summer in March has adversely impacted crop yield.

India is aiming at exporting 10 mt of wheat in 2022-23. However, with the domestic prices of wheat ruling above MSP, the government is likely to take measures to restrict exports soon.

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