Amid a surge in exports which has pushed mandi prices above the minimum support price (MSP), wheat procurement by Food Corporation of India and state government agencies has declined. MSP purchases of wheat stood at close to 7 million tonne (MT) on Sunday, down 32% from the year-ago level.
According to a food ministry statement on Monday, wheat has been purchased by agencies from 0.586 million farmers so far with a MSP value of Rs 1,391 crore.
Currently, mandi prices of wheat in key producing states like Punjab, Haryana, Madhya Pradesh and Uttar Pradesh are ruling at 8-10% above the MSP of Rs 2,015 per quintal.
The sharpest fall in wheat procurement this session has been in Uttar Pradesh, the biggest producer of grain, where the state government has purchased just 30,206 tonne of wheat so far from 6,155 farmers, while it had procured 0.35 MT of wheat from 67,395 farmers during the same period in 2021.
According to an Uttar Pradesh food department official, main purpose for the MSP-based wheat procurement initiative was to ensure that farmers are not paid prices below MSP and there was no distress sale of the commodity. “Now that farmers are getting better prices in the market, our purpose is achieved,” the official said.
More than 3.21 MT of wheat has been procured in Punjab so far against 3.44 MT of grain purchased during same period last year. Punjab is the second-biggest producer of wheat in the country and also contributes the highest volume of grain to the central pool.
Madhya Pradesh, which had announced incentives such as abolition of mandi taxes and other levies from the wheat purchased for export, state civil supplies corporation till Sunday has procured 0.9 MT of wheat against 1.7 MT purchased during the same period last year.
The procurement target of 12.9 MT for the state, which contributes the second biggest volume of grain to the central pool, would decline by more than 6-7 MT.
In Haryana so far, wheat purchase from farmers has declined by more than 62% to 2.77 MT against 4.45 MT of purchase during the same period last year.
In other key producing states such as Rajasthan, Uttarakhand and Himachal Pradesh, the wheat procurement has been rather sluggish so far.
“We are currently buying wheat at the price of Rs 22.50/kg, which is above the MSP of Rs 20.15/kg,” Shammi Agarwal, managing director, Pansari Group, a Delhi-based FMCG major, stated.
This time, wheat procurement is being keenly watched as a surge in exports because of disruption in global supplies over the Ukraine-Russia conflict has pushed up demand for wheat from India.
Recently, Egypt, one of the biggest importers of grain globally, has in principle given approval for importing the grain from India.
India is aiming at exporting 10 MT of wheat in 2022-23. In 2021-22, India exported a record 7 MT of wheat.
There are also concerns about the drop in wheat production in 2021-22 crop year (July-June) because of unusually high temperatures during the end of March which had impacted the yield. However, the agriculture ministry is still sticking to its estimates of 111.32 MT of wheat production this year compared to 103.88 MT in the 2020-21 crop year.
Food ministry officials have stated that the target of 44 MT of grain procurement from farmers across all the growing states would be reduced by around 10 MT due to a possible surge in exports and high mandi prices.
Official procurement session is from April-June, while a bulk of the wheat crop arrives in the mandis during the first six weeks of the procurement session.