Govt's challenge increases on wheat, procurement may remain at last year's level  

Amidst claims of record wheat production by the government, the reality might turn out to be different. In many markets of the country, wheat prices have gone above the minimum support price (MSP) of Rs 2275 per quintal for the current Rabi Marketing Season (RMS 2024-25). Procurement of wheat may remain around 262 lakh tonnes, which is the last year's level of procurement.Till now, procurement has reached 255.24 lakh tonnes.

Harvesting of wheat is over in the major wheat producing states of Haryana, Punjab, Uttar Pradesh, Madhya Pradesh, Rajasthan and Uttarakhand. Arrivals of wheat in the mandis has gove down. In such a situation procurement may be about 100 lakh tonnes less than the government's target of 372.90 lakh tonnes set by the Union Food and Consumer Affairs Ministry and Food Corporation of India.

Given the low procurement of wheat and 16-year-low stocks of wheat in the central pool as on April 1, 2024, India may become an importer of wheat. The government may consider this option after the general elections to control wheat prices. In any case, wheat from Ukraine and Russia will be arriving in the global markets from July onwards. At present, 40 percent duty is applicable on wheat import due to which import is not viable right now.

The procurement data of wheat is bound to raise questions on the government's production estimates and procurement targets. According to the second advance estimates released by the Ministry of Agriculture and Farmers Welfare, wheat production for the current Rabi season 2023-24 will be 11.20 crore tonnes, which is the highest till date. Last year 11.05 lakh tonnes of wheat was produced. Due to favourable weather conditions for wheat crop, yields in Punjab, Haryana and Western Uttar Pradesh have been good and according to farmers, it is the best in the last four years.

A senior scientist from IIWBR, Karnal, an ICAR institute, told Rural Voice that many farmers from Haryana, Punjab and Western UP got a yield of more five tonnes per hectare this year.

In the current rabi season central India, particularly Madhya Pradesh witnessed abnormal temperatures in December, which was not good for wheat crop. After that in March unseasonal rains and hailstorm also damaged the wheat crop in large parts of the state. According to a senior scientist of ICAR, yield has been affected by 15-20 percent in many places in Madhya Pradesh due to unfavourable weather conditions.

Yogesh Dwivedi, CEO of Madhya Bharat Consortium of FPOs, told Rural Voice that in many places production has been affected by up to 25 percent. But surprisingly, despite the market signals, the government does not seem to be making any change in its stance on production estimates yet.

Till now, a total of 255.24 lakh tonnes of wheat has been procured by the government in the country. 122.31 lakh tonnes of wheat has been procured in Punjab, 70.32 lakh tonnes in Haryana and 45.66 lakh tonnes of wheat in Madhya Pradesh. Government procurement of 8.47 lakh tonnes of wheat was done in Uttar Pradesh and 8.35 lakh tonnes of wheat  procured in Rajasthan.

Government procurement figures in Madhya Pradesh clearly indicate that wheat production has been affected. In the year 2019-20, Madhya Pradesh had overtaken Punjab and achieved the first position in the country with government procurement of 129.42 lakh tonnes of wheat. That year, 127.14 lakh tonnes of wheat was purchased in Punjab, whereas the total procurement of wheat in the country was 389.93 lakh tonnes.

In the next year 2020-21, government procurement reached an all-time record level of 433.44 lakh tonnes. But then Madhya Pradesh came second in government procurement of wheat. That year, there was procurement of 56.41 lakh tonnes of wheat in Uttar Pradesh, whereas this year UP is struggling to reach even 10 lakh tonnes.

This time again Punjab and Haryana have played an important role in the government procurement of wheat and has proved that these two states are still the most reliable in terms of food security of the country. In Madhya Pradesh and Rajasthan, state governments are giving a bonus of Rs 125 per quintal over and above the MSP of wheat fixed by the central government, which makes the procurement price of Rs 2400 per quintal in these states. On the other hand major reason for the low government procurement in Uttar Pradesh is the big purchases of wheat by private traders at higher prices than the MSP.

In Madhya Pradesh, better quality wheat is being sold at a price of more than Rs 2400 per quintal. Traders say that only low-quality wheat is going for government purchase. On a large scale, farmers have also stored wheat in expectation of better prices in coming months, as last year the prices had gone up to Rs 3000 per quintal.

Last year, the government made sustained efforts to control prices by selling wheat through open market sales on a large scale. But this year, wheat stocks in the central pool are at a 16-year low, government procurement is about 100 lakh tonnes short of the target and prices remain above MSP during the procurement season itself. These factors may increase wheat prices in next few months. This situation is also raises questions on wheat production estimates made by the government.