Overview of Current Procurement
India’s wheat procurement for the year ending June 30 reached 26.6 million tonnes (mt), as reported by the Food Corporation of India (FCI). Although this figure represents a three-year high, it falls short of the government’s target of 37.3 mt. The procurement process commenced on April 1. Despite the government’s set target, private traders purchasing wheat at higher prices than the minimum support price (MSP) impacted the total procurement volume.
Historical Comparison and Regional Performance
- In the previous fiscal year (2022-23), the Centre procured 18.79 mt of wheat, while in 2023-24, it procured 26.2 mt.
- The record procurement was in 2021-22, with 43.34 mt.
- Regionally, Punjab and Haryana ended their procurement on May 31, with a combined total of 19.6 mt, achieving 93 percent of their target of 21 mt.
- Conversely, Madhya Pradesh, Uttar Pradesh, and Rajasthan collectively procured 6.98 mt against a target of 16 mt.
Mandi Arrivals and Market Conditions
During the record procurement year of 2021-22, arrivals at purchase centers were at 44.4 mt. This season, arrivals were over 36 mt, which, considering current market conditions, is not unfavorable. According to traders, the government procured only the quantity necessary to meet its scheme requirements, as farmers received prices at or above MSP from the open market. An expert noted that controlling wheat prices after November might be challenging. With most wheat in the hands of traders and limited government stocks, significant market intervention may not be feasible.
Government Measures and Stock Management
Last year, to curb price rises, the government sold 10 mt of wheat in the open market through weekly e-auctions. For the current year, surplus wheat beyond the annual requirement of 18.4 mt will be 8.2 mt if buffer stocks remain unchanged by April 1, 2025. On June 24, the government imposed a Stock Limit Order on wheat stakeholders. This order restricts the maximum quantity that processors, traders, wholesalers, and retailers can hold at any given time. This measure, effective immediately, will remain valid until March 31, 2025.
Compliance and Stock Limits
- The Stock Limit Order, under The Removal of Licensing Requirements, Stock Limits, and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2024, mandates stakeholders to comply within 30 days.
- The Food Ministry stated that each trader or wholesaler could hold up to 3,000 tonnes of wheat at any point. Retailers, including large chain retailers, are limited to 10 tonnes, while large chain retailers can hold 3,000 tonnes at their depots.
- For processors, the stock limit is set at 70 percent of the Monthly Installed Capacity (MIC) multiplied by the remaining months of FY 2024-25.
India’s wheat procurement faced challenges this year, with private traders buying at higher prices, impacting the government’s target. Despite reaching a three-year high, the procurement fell short of expectations. Regional disparities in procurement and the upcoming challenge of controlling prices highlight the complexities of the market. The government’s measures, such as imposing stock limits and previous efforts to control prices through e-auctions, indicate ongoing efforts to stabilize the market.