Wheat stock drops to 16-year low, a tad above buffer norm

Wheat stock in Central government’s reserves fell to its lowest in the last 16 years on April 1. It is still at 42,000 tonnes above the buffer norm of 74.6 lakh tonnes (lt).

This has resulted in private traders pushing up their buying using various alternatives, despite the government’s ‘unofficial order’ asking them to stay away from market till the procurement target is met. The government has boosted its procurement drive in the last couple of weeks.

The Central Pool stock as on April 1 this year was 75.02. Its previous lowest was 58.03 lt in 2008.

“We do not know how much the government would be able to buy. Nor we know how much quantity it will offer to processors. Then there is also maximum quantity restriction in the weekly tender. If we do not buy now, how will we meet our requirement,” said a flour miller.

Though the Centre has set a target to buy 372.9 lt in the marketing year beginning April 1, officials have said that the “realistic” procurement may be 310 lt-320 lt. The agriculture ministry has pegged the wheat production to be record 1120.2 lt for 2023-24 crop year (July-June).

Procurement has reached 27.2 lt until April 13, up by 7 per cent from 25.5 lt year-ago, sources said. The purchase in Madhya Pradesh has been hampered due to rains in last few days and as a result, total procurement is now down to 17.73 lt from 20.06 lt. The government targets to buy 80 lt from MP.

“Millers’ demand from the south is normal like last year and they have not seen any substantial drop in orders despite the state government paying bonus of ₹125/quintal over and above the MSP of ₹2,275/quintal,” a commission agent in Itarsi, Madhya Pradesh, said. He said small farmers who want immediate money prefer to sell at mandis rather than wait for government procurement where there is a token system and they have to sell only at the allotted date.

In Rajasthan, the Centre has been able to buy 61,572 tonnes despite the state paying ₹125/quintal bonus like in MP. Though the purchase is much higher from 430 tonnes year-ago, still it may be considered negligible as the arrival has been reportedly reached 3.38 lt.

“Farmers who want money not to be adjusted by the banks against their farm loan account, prefer to sell in mandis and they do not mind selling at ₹2340-2360/quintal, which is also above the MSP,” said a flour miller of Rajasthan who is buying wheat from supplier at ₹2400/quintal at mill-gate delivery.

On the other hand, there is confusion in Uttar Pradesh with regard to policy as there has been frequent U-turns. “One day they (state officials) ban permit to take out wheat outside mandi’s jurisdiction, and in 3 days they withdraw that order. One day a mandi prohibits private trader, the other day that order gets nullified. Food department wants to follow Centre by scaring private traders, agriculture department asks mandi samitis to ensure farmers sell at higher prices,” said a stockist in Bahraich district of UP.

The Centre has bought 12.48 lt of wheat from UP whereas the aim is to buy 60 lt in this season.

“We know wheat will come to market whether it is stored by government or farmers hold it. We will wait until that stock arrives in mandis rather to get into unwarranted losses. If we buy, we fear there will be raids. If not, the government will sell at lower rates,” said the stockist.

Farmers in Uttar Pradesh are said to have decided not to bring their entire crop at once and rather sell in tranches. Some farmers also do not want to sell below ₹2,400/quintal and expect rates to reach that level by July after government procurement ends. However, sources said that traders have made arrangement with farmers by buying the wheat but still in the custody of farmers or have kept in warehouses in the name of farmers.

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