Wheat stocks at three-year low in central pool; prices higher than MSP in MP

The wheat stocks have reached a three-year low in the central pool. Despite the higher procurement last year, the wheat stocks came down to 189.90 lakh tonnes (lt) on 1 Apr 2022. These stood at 273 lt at the same time a year ago. However, the stocks are still about 2.5 times the buffer norms of 74.60 lt for the central pool on April 1. The buffer norms, which are necessary to facilitate foodgrains availability and the public distribution system (PDS) and other schemes in the country, are fixed for the central pool at different times of the year.

The government has set a target of procuring 444 lt of wheat in the current Rabi marketing season (April to June). But going by the rapid rise in temperature over nearly the last one month, wheat production is likely to get affected in some parts of the country, which in turn is weakening the possibility of the production reaching the earlier government estimate of 11.13 crore tonnes. Besides, wheat prices are rising rapidly in the global market due to the Ukraine–Russia war. This is why there are reports of export deals of 35-40 lt of wheat having been struck for the April-July period this year, too, after 70 lt of wheat exports last year. Therefore, exporters are buying wheat in the market, which has led to wheat prices running above the Minimum Support Price (MSP) at Rs 2,015 per quintal in several states. Given this situation, meeting the public procurement target appears to be difficult.

Foodgrain stocks (in lt) in the central pool on April 1

                              Wheat                  Rice                      Total

 2019                     169.92                  398.16                  568.08

2020                      247.00                  491.49                  738.49

2021                      273.04                  499.29                  772.33

2022                      189.90                  550.37                  740.27

Source: Food Corporation of India (FCI)

Yogesh Dwivedi, CEO of Madhya Bharat Consortium of FPOs, told Rural Voice that his FPO was buying wheat at Damoh, Dewas, Raisen and Tikamgarh and the price of wheat was above MSP at all these places. He said that wheat was purchased at Rs 2,030 per quintal at Damoh and at Rs 2,100 and Rs 2,140 per quintal at Dewas on April 12. The MSP of wheat for the current season is Rs 2,015 per quintal. His FPO is buying wheat for domestic industry and exporters both. Dwivedi says the public procurement of wheat in Madhya Pradesh (MP) in the current season will be less than that last year.

The primary reason for the reduction in wheat stock in the central pool has been the free distribution of 5kg of foodgrains under the Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY). Besides, the allocation of foodgrains under the Public Distribution System (PDS) has also been substantially higher. The offtake of wheat from the central pool was 271.90 lt in the financial year (FY) 2019-20. Which went up to 363.90 lt in FY 2020-21 and 464.60 lt during April to February, the first 11 months of FY 2021-22. Last year, the offtake till February was 184.90 lt only under the PM-GKAY.

However, contrary to wheat, the stocks of rice in the central pool were at a record 550.40 lt on 1 April 2022. A major reason for this has been the massive increase in the public procurement of rice. Last year (2021-22), 610 lt of rice was procured from April to February while the offtake of rice was 501.50 lt during this period.

Temperatures rising sooner than usual in Punjab, Haryana and parts of Uttar Pradesh (UP) are likely to affect wheat production, leading to less production. Besides, the possibility of an increase in exports may also lead to less public procurement of wheat. The wheat stocks in the central pool may, therefore, remain at less than that last year.