Wheat procurement drops on low arrivals in Punjab, MP

Wheat procurement in the country has dropped 37 per cent as arrivals in Punjab are only 13 per cent so far compared with the year-ago period. However, millers and traders in the State said that low arrivals were mainly due to the grains getting wet from the recent rains. Once the wheat dries up, farmers will bring it to procurement centres.

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Millers are relying on higher than targetted procurement by the Punjab government and are not interested in buying much as they expect to purchase the foodgrain from the Food Corporation of India (FCI) at  ₹2,300/quintal as announced, which is lower than the price they have to pay now.

The total procurement of wheat has reached 60.58 lakh tonnes (lt) until April 18 against 95.36 lt a year ago, official sources said. There is similar drop in wheat arrival which was recorded at 86.23 lt until April 18 against 130.97 lt a year ago.

Procurement to top target?

The Centre has procured 3.31 lt of wheat in Punjab against 31.68 lt a year ago whereas arrivals have been reported at 4.71 lt, down from 40.07 lt a year ago. “It looks, the production is 10-15 per cent more this year in Punjab. The crop quality is very good and once it is dried, farmers will bring the grain. There is no reason why procurement will not exceed the target of 130 lt. It may reach 132 lt,” said Naresh Ghai, president of Punjab Roller Flour Millers Association.

Asked if millers plan to buy aggressively this year, Ghai said once the government completes its procurement, millers will buy if required after that. Sources said Punjab millers want to buy wheat from the FCI through the open market sale scheme (OMSS) which will be at least  ₹50/quintal cheaper as they have to spend more to buy the grain from the mandi (agri-market yard). After paying the ₹2,280/quintal (MSP equivalent), millers will also have to bear arathiya (agent) commission and some other charges which will take the total cost at the mill gate to ₹2,400 per quintal.

The purchase in Madhya Pradesh has been hampered due to rains and as a result, the total procurement is now down to 24.55 lt from 27.98 lt a year ago. The government targets to buy 80 lt from MP. Wheat procurement in Haryana, where target is also 80 lt, has reached 28.73 lt, down by 18 per cent from 35.05 lt a year ago.

Bonus payment

In Rajasthan, the Centre has been able to buy 1.30 lt, which is much higher from 5,208 tonnes a year ago. However, sources said since the State is offering to pay ₹125/quintal bonus over and above the MSP, like in MP, purchases are higher. But, considering that arrival has reached 4.66 lt, the procurement should have been much higher. Last year was unusual and only 4.38 lt could be bought in the entire season, the sources said.

The Centre has bought 2.65 lt of wheat from UP so far, whereas the aim is to buy 60 lt in this season. Though it is much higher than 54,835 tonnes bought in the year-ago period and also according to the arrival volume, but holding back of the grain by the farmers could be counter productive for the government to meet the target.

Due to informal restrictions on traders and large corporates by Uttar Pradesh, farmers are forced to sell to the government at MSP whereas they think they could have realised higher prices due to a rise in demand.

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Wheat stock in the Union government’s reserves fell to the lowest in last 16 years on April 1, putting pressure on the government to buy as much quantity as possible. Though the official target is to buy 372.9 lakh tonnes (lt) in the marketing year that began on April 1, officials have said the “realistic” procurement might be 310-320 lt. The Agriculture Ministry has pegged wheat production at a record high of 1120.2 lt for the 2023-24 crop year (July-June).