States rope in private sector to store wheat

NEW DELHI: Key foodgrain states have begun issuing tenders to enlist the private sector for storing wheat against a backdrop of overflowing state godowns and warehouses following last year’s bumper harvest. (Watch)

The Centre expects a bumper wheat harvest of around 82 million tonnes (mt) this year compared to around 80 mt last year. However, an empowered group of ministers (EGoM) last fortnight firmly rejected the proposal to export wheat to clear the warehouses for the new crop, putting off a review at least until June this year, when a clearer picture emerges on the coming Kharif crop.

Last week, the IMD gave early indications that it expected normal monsoons this summer but the Centre, especially in view of the persistently high food inflation (over 16%) for several weeks now, is keen that food security is prioritised before okaying wheat exports. To boot, wheat prices in the global market have been soft thus far, making it difficult for India to export wheat without a substantial subsidy so that the grains are competitively priced despite the relatively high domestic support price.

Top procurement states Punjab and Haryana have already begun the process of enlisting storage from the private sector. Official procurement in the states is expected by April 1 and the system is gearing up to handle the overflow of grains expected. “A record wheat harvest is expected this season. We’ve already directed states which expect a bumper grain harvest this season to enlist storage through tenders from the private sector. State governments in Punjab and Haryana have begun advertising in newspapers to achieve the objective,” a food ministry official said.

In Punjab, the private sector is being tapped for storage of around 44 lakh tonnes of wheat. This is over and above a storage shortfall of 32 lakh tonnes of wheat in the state. In Haryana, meanwhile, authorities have reportedly indicated a storage space shortfall of around 29 lakh tonnes. Against that, reports are that the state governments are tapping sugar mills and rice mills apart from planning for storage in the state wholesale grain mandis.

The record wheat production expected in the two key states is despite the fact that wheat acreage in both states has dipped this year compared to last year, indicating that wheat productivity is higher. However, the quality of wheat may not be the same as last year. Comparatively high temperature in March (almost 40 degree Celsius, the first time in years), though, could impact the wheat from the two top states for central purchase, especially if the heat wave spell persists for another week.

In all, the estimated output from these two states this year is around 185 lakh tonnes compared to around 174 lakh tonnes last season. Of this, the government expects to purchase around 115 lakh tonnes of wheat from Punjab alone compared to a lower 107.47 lakh tonnes last season.