Non-traditional states record higher wheat procurement this season

NEW DELHI: More than a week down into the marketing season, wheat buys by the government from non traditional states such as Madhya Pradesh and Rajasthan have zoomed up noticeably even while buys from Uttar Pradesh have registered a slow pace compared to other years, thanks to the Food Corporation of India (FCI)���s decision to tone purchases down and leave the bulk of the buys to the private sector.

That would virtually be a volte face for the government���s attitude to private sector buys in 2006 and 2007, when it placed many strictures on big private buyers of wheat and had to import high priced wheat after Uttar Pradesh refused to sell to the state agencies. The refusal, in fact, cost the exchequer heavily, pushing up global wheat prices markedly. Big buyers such as Cargill, ITC, Adani, Delhi Flour Mills, AWB (now Wheat Australia) were all prevented from making big purchases by stock limit declaration and other strictures.

���Our target for wheat buys was around 24 million tonnes earlier. It could go down to anywhere between 20-22 million tonnes for the marketing season despite a downward revision of production estimate from 80 million tonnes earlier to 78 million tonnes. With two years of bumper wheat harvests, the last year���s leftover will have to be got rid of first. This means that the private sector has to make big domestic purchases and we are hoping that the removal of stock declaration strictures and plunging prices will make it attractive for them to do this. At present this appears slow, but later in the season, this could pick up. Ban in exports likely to be lifted up to two million tonnes by May in order to avoid a big pile up,��� the government sources said.

Interestingly, some damage to wheat has been reported due to unfavourable weather in UP and Punjab, though the effect on the total output has yet to be gauged.

Wheat prices have dipped by Rs 70-130 per tonne from the minimum support price (MSP) of Rs 1,080 per tonne in UP. State agencies are understood to have bought only around 1,000 tonnes by Tuesday from the state. Purchases in MP, meanwhile, have reached an impressive 3.37 lakh tonnes in the past eight days (compared to 1.46 lakh tonnes in the same period last year).

State purchases in Rajasthan have already reached 95,000 tonnes and, according to officials, could easily surpass 7 lakh tonnes mark by May although the marketing season extends almost a month beyond that. Wheat price is reigning around Rs 1,080-1,025 per tonne in the state, which is forking out an additional Rs 50 per tonne bonus to wheat farmers. The total state buys by the end of season in the state may hit 10 lakh tonnes this year compared to 9.35 lakh tonnes last year. This year, in fact, government buys here are expected to set a record. Compared with that, government buys in Haryana and Punjab were lower than 50,000 tonnes by Monday. Wheat support prices in Haryana and Punjab, top producers in the country, are reigning at MSP.