India: wheat procurement drops by 54% to 18.65 million tonne, likely to hit 13-year low

The government’s wheat procurement in the current year fell by more than 54% on year to 18.65 million tonne (mt) till Tuesday.

With an arrival of only around 81,000 tonne of wheat on Tuesday in mandies mostly in Uttar Pradesh and Madhya Pradesh, purchase of the grain by the Food Corporation of India (FCI) and other agencies at the Minimum Support Price may not touch 19 mt against 43.34 mt purchased last year during rabi marketing season (April-June).

This means the purchases of the cereal by the government at MSP would hit a 13-year low this year.

In the last 10 days, only 0.5 mt of wheat was procured by agencies despite the government imposing restriction on wheat exports on May 13. Food ministry last month had revised downward the wheat procurement target from 44 mt to 19.5 mt for the current rabi marketing season (2022-23).

As on May 15, FCI had a wheat stock of 31.15 mt against the buffer norm for July 1 of 27.58 mt. The stock is adequate to meet requirement of wheat under the National Food Security Act and the Pradhan Mantri Garib Kalyan Anna Yojana (till September 30).

Punjab and Haryana, which contributed close to 74% of the total wheat procurement so far, closed their procurement operations on Tuesday. In Uttar Pradesh, Madhya Pradesh and Rajasthan, procurement of wheat by agencies would continue for the next two weeks.

In Punjab, wheat procurement by government agencies ended with purchases of just 9.62 mt, down a quarter, on year. The target was 13 mt.

In Haryana, 4.14 mt of wheat has been procured by agencies, while in Madhya Pradesh, more than 4.58 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 8.49 mt and 12.77 mt, respectively.

In other wheat-growing states like Uttar Pradesh, Rajasthan, Uttarakhand and Gujarat, the volume of grain procurement this year has seen a sharp decline. In Uttar Pradesh and Rajasthan, only 0.29 mt and 0.002 mt of wheat has been purchased from farmers by government agencies so far against 3.97 mt and 1.9 mt procured, respectively, a year ago.

Wheat procurement operations in Uttar Pradesh and Madhya Pradesh will continue till June 15 while purchase operations will be completed in Rajasthan on June 10.

Last month, 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, has led to sharp fall in procurement.

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 `2,100-2,400 a quintal against the MSP of `2,015 a quintal prior to the government imposing ban on shipment on May 13. Farmers are also holding some quantities, expecting higher prices of wheat after some months.

The government had revised the estimate of wheat production in the 2021-22 crop year (July-June) to 106 mt, down from its February projection of 111.32 mt in the third advance estimates of foodgrain production released last month.

Tags: wheat, India, procurement, restriction, exports, grain, Production