Govt buying low-quality wheat good for farmers and trade

By: |
May 6, 2015 12:15 AM

The FIFO—first-in first-out—mandate that is applied for stock distribution to official stocks will not apply for current dispensation.

By the time you read this, the government would have procured over 20 million tonnes of wheat this year from various states, in addition to 17 million tonnes of carry-in stock as of April 1, 2015. Apart from good milling quality and pursuant to relaxation in specifications, lustre loss variety is also bought in abundance; broken and shrivelled percentage in grains is enhanced from 6% to 9-10%; and moisture content is raised from 12% to 14% across the board. Though value cuts were intended to be applied initially, they were later foregone; sellers/farmers will now realise full MSP value of R1,450 per quintal.

Such relaxations are subject to the condition that this deficient quality will be consumed within procuring states under TPDS and welfare schemes. The FIFO—first-in first-out—mandate that is applied for stock distribution to official stocks will not apply for current dispensation. This means grains of previous years can stay stocked while the latest or current year acquisitions will be destocked first.

A practical approach is adopted by the food ministry due to exigencies arisen out of exceptional climatic conditions in February and March. The government should not hesitate in procurement of low quality wheat as all shades and grades of wheat are abundantly marketable at a price. Traders do not have the financial muscle to buy large tonnages at the harvest time and official intervention is helpful both for farmers and the trade.

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Prima facie, FCI and state government agencies will have in their possession four broad categories of wheat. One, FAQ (fair average quality) or common grade milling type. Two, lustre loss class, the one which has lost its sheen and reportedly gives lesser flour yield. Three, which could be any of the two classes indicated earlier but with elevated percentage of broken or shrivelled content. Four, which is inedible for human consumption due to lack of hygienic handling or warehousing. The latter two categories can be straight away classified as ‘feed wheat’.

Grain quality is characterised into ‘intrinsic’ and ‘extrinsic’. Intrinsic factors include colour, nutrients, bulk density, odour, aroma, size and shape. Colour is an important primary factor for characterisation and grading, trade, and processing of grain. It is a common criteria used in wheat trade and thus lustre loss qualifies as a deficiency in intrinsic factors. Extrinsic factors include age, broken or damaged grain, immature grain, foreign matter, infected grain and moisture content. Lustre loss wheat may require blending with better quality grain and likewise flour yields may be affected by higher shrivelled proportion.

FCI’s ‘quality control’ parameters, as listed on its website, are silent about three ‘intrinsic’ constituents. One, bulk density—called test weight—that varies usually between 74-78 kg per hectolitre. Two, protein content that fluctuates around 9-14%. Three, gluten content—the measure of stretchability of flour—which hovers around 22-28%. Export tenders of FCI have been stipulating all forms of refractions/constituents and Indian wheat complies with these requirements. What is required now for FCI is to descript in detail the missing elements of protein, test weight and gluten in tabulated form in quality control protocol for all the four categories of wheat that are now available in its system.

Russian wheat is classified as No 2, No 3 and No 4 by calibrating it with protein content of 13.5%, 12% and 10%, respectively, while No 5 type is termed as feed wheat. They are priced in the sliding scale. The US, the EU and Canada have differentiated grains as soft, hard and feed wheat, etc. Identity determination is critical in the Indian context this year, especially when ubiquitous tonnages of suboptimal quality of wheat are distributed under PDS and welfare schemes.

It is incumbent upon the government to segregate good wheat from lustre loss and other flawed varieties; list out parameters and refractions of varied groupings; differentially calibrate their prices for OMSS purpose; and let the TPDS and users of other welfare schemes know the type of wheat being made available to them lest there be resentment by the PDS users for serving them with less than the best quality of wheat.

Notwithstanding the above, there is a very large market of lustre loss quality and de-weathered grains as feed wheat in India and abroad. The demand for feed can easily fetch R10 per kg (equivalent to maize prices) versus R4-6 per kg for BPL and APL and R2 per kg in the AAY scheme. It will make economic sense to auction lustre loss and other bulk grains with 9-10% broken or shrivelled content. Millers can blend this wheat with good quality produce. Traders can consider exporting if auction price is about R10 per kg or so for feed/food millers abroad.

Selling all four types of wheat by FCI or state government agencies at ‘one fixed’ OMSS price is illogical. Initiative must come from the government in rating the prices of deficient varieties for marketability or let the price discovery be arrived through auction or tendering. In fact, good quality or FAQ wheat—whether of current or earlier years—should be supplied under TPDS and other welfare schemes for prevention of any political controversy, while other types can be disposed of as suggested.

The author is a grains trade analyst

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