Reduced Wheat Arrivals in Punjab and Madhya Pradesh
Wheat procurement across India has seen a significant decrease of 37% due to lower grain arrivals, particularly in Punjab, where figures are only 13% of what they were in the same period last year. Industry insiders attribute this drop primarily to recent rainfall, which has left the grains too wet for sale. It is anticipated that once the wheat dries, farmers will resume deliveries to procurement centers.
Pricing and Procurement Strategies
Currently, millers are holding off on large purchases, anticipating the ability to buy wheat from the Food Corporation of India (FCI) at a lower rate of $0,276 per kg, which is the government-announced price and less than current market rates. As of April 18, the total wheat procured was 6.058 million tonnes. It’s down from 9.536 million tonnes at this time last year. Similarly, wheat arrivals have decreased, with only 8.623 million tonnes reaching markets, a drop from last year’s 13.097 million tonnes.
Wheat Procurement in Punjab
In Punjab, the government has only managed to procure 0.331 million tonnes of wheat, compared to 3.168 million tonnes last year, while wheat arrivals totaled 0.471 million tonnes, down from 4.007 million tonnes previously. Naresh Ghai, president of the Punjab Roller Flour Millers Association, remains optimistic. He’s citing an estimated 10-15% increase in production and excellent crop quality this year. He predicts that procurement could surpass the target of 13 million tonnes, potentially reaching 13.2 million tonnes.
Millers’ Purchase Plans and Cost Considerations
Once government procurement concludes, Punjab millers intend to buy the required wheat through the open market sale scheme (OMSS), which could save them around $0,60 per kg compared to buying directly from markets. Including the minimum support price (MSP) of $0,27 per kg. Additional costs like agent commissions and other fees could bring their total expenditure to approximately $0,28 per kg at the mill gate.
Challenges in Madhya Pradesh and Haryana
In Madhya Pradesh, unseasonal rains have disrupted wheat procurement, reducing totals to 2.455 million tonnes from 2.798 million tonnes last year, against a government target of 8 million tonnes. In Haryana, procurement has similarly fallen by 18%, with 2.873 million tonnes procured of an 8 million tonne target.
Bonus Payments and Incentives in Rajasthan
Rajasthan has seen a modest increase in procurement due to a state-offered bonus of $1.50 per quintal over the MSP. Current procurement stands at 0.13 million tonnes, significantly higher than the 5,208 tonnes from the previous year. Despite these incentives, procurement volumes remain below potential, given the 4.66 million tonnes that have arrived this season.
Government’s Broader Procurement and Stock Goals
The government’s wheat stock has dwindled to its lowest in 16 years as of April 1, prompting efforts to maximize procurement. While the official target for this marketing year is 37.29 million tonnes. Realistic expectations set by officials range from 31 to 32 million tonnes. This comes as the Agriculture Ministry reports a record high wheat production. It estimate of 112.02 million tonnes for the 2023-24 crop year.
The decrease in wheat procurement highlights the challenges faced by Indian farmers and government agencies alike, as they navigate climatic unpredictabilities and market dynamics. The situation underscores the need for adaptive strategies to ensure food security and fair compensation for growers.