Govt wary of wheat stocks as crop arrivals begin

By Sandip Das

The concerns over wheat stocks with the government have resurfaced. The government’s wheat procurement drive for 2023-24 marketing year may be hit with mandi rates – prices fetched by farmers – continuing to rule above the minimum support prices even amid early arrivals of new crop. Besides, possible heatwave conditions are posing a threat to the standing crop.

At present the Food Corporation of India (FCI) has wheat stocks of 12.6 million tonne (MT) which are expected to plummet to 9.5 MT or below by April 1, the lowest since 2017. The buffer for April 1 is 7.4 MT, 27.57 MT for July 1.

The MSP for wheat for the current season is Rs 2,125/quintal. Wheat procurement usually starts in April and continues for four months.

Sources told FE that the government has called a meeting of key wheat producing states including Punjab, Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh on Wednesday to plan purchase of grains from farmers. The possibility of lower output and robust demand are likely to keep mandi prices elevated in the coming weeks too.

“We will be able to procure a substantial quantity of wheat from farmers in the next season. The weather pattern next month and the flowering of the crop would be crucial for eventual output,” a food ministry official told FE.

To replenish the stock, the FCI and state agencies are aiming to procure at least 30 MT of wheat in the 2023-24 marketing season (April-June) so that sufficient quantity of grain is supplied to beneficiaries of National Food Security Act, besides creation of adequate buffer.

“Mandi prices are likely to rule above MSP even when the new crop starts arriving in the market in large quantities by the end of March given the possibility of high temperature affecting output. Demand is remaining strong too,” Mukhesh Khatod, a wheat trader from the Chittorgarh mandi, Rajasthan, said.

New crop arrivals of early sown varieties in Madhya Pradesh and Gujarat is currently fetching around Rs 2,200-2,300/quintal. Traders say that this year’s temperature in the next four weeks will decide the output and thus would impact prices.

Also read: Government has sold 1.8 mn Tonnes wheat in open market to scale down prices

For the current crop year (2022-23), the government has estimated a record wheat harvest of 112.18 MT. Total area planted with wheat crop has risen by only 0.13 million hectare (mh) to 34.32 mh in the current crop year from the year-ago period.

The harvesting will commence by the middle of March in Madhya Pradesh, it will commence in Punjab, Haryana, Uttar Pradesh and Rajasthan in April.

India Meteorological Department as well as private weather forecaster Skymet in their prediction on Sunday have stated formation of fresh western disturbance over the western Himalayan region during February 28-March 2, which is expected to bring in rains over Punjab and Haryana.

Due to lower production and higher global demand, FCI’s procurement in the 2022-23 marketing season fell by more than 56.6% to only 18.8 MT against 43.3 MT purchased from farmers in the previous year.

Recently the reserve prices of wheat to be sold in the open market from the FCI stock was cut by Rs 200/quintal to Rs 2,150/quintal from for the e-auctions to be held till March 15, 2023. While 1.8 MT of wheat has been sold in the open market by FCI since the beginning of the month, another 0.6–0.7 MT of wheat will be sold in the next two e-auctions next month.

Inflation in wheat prices rose by a sharp 25.05% on year in January, pushing up retail food inflation to 5.94% from 4.19% reported in the previous month.

This article has been republished from The Financial Express.