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Wheat procurement crosses 24 million tonnes, inches closes to govt target

LiveMint logoLiveMint 02-05-2017 Sayantan Bera

Bolstering the official estimates of a bumper wheat crop, procurement of the foodgrain from farmers by government agencies touched 24.6 million tonnes on Tuesday, 18% higher than the 20.8 million tonnes procured by this time last year.

While the procurement so far is higher than the 23 million tonnes purchased last year during the entire April-June rabi marketing season, it is about 75% of the 33 million tonnes targeted for this year (2017-18).

The robust procurement lends credence to the agriculture ministry’s advance estimates of a record 96.6 million tonnes of wheat harvest in 2016-17, following a normal monsoon last year. Higher procurement will not only help replenish government stocks which dipped to a nine-year low of 9.4 million tonnes in early March, it will also keep retail prices in check in the coming months.

In 2015-16, poor rains cut India’s wheat crop to a low of 92.3 million tonnes, leading to higher retail prices and a surge in imports to 5.5 million tonnes.

On 28 March, the centre reinstated the 10% import duty on wheat (it had abolished the duty in December 2016) to protect local prices from dipping below government-announced minimum support prices (MSP).

The government procures wheat from farmers at an MSP of Rs1,625 per quintal and distributes it under the subsidised public distribution system.

Data on state-wise procurement shows that most of the wheat is purchased from farmers in Punjab, Haryana and Madhya Pradesh, with the largest wheat producing state of Uttar Pradesh at usual lows.

Government agencies have procured 11 million tonnes of wheat from Punjab, followed by 7 million tonnes from Haryana and about 5 million tonnes from Madhya Pradesh—accounting for over 93% of the 24.6 million tonnes procured so far.

In comparison, procurement in Uttar Pradesh stands at a dismal 0.9 million tonnes, far short of the 3 million tonnes targeted by the food ministry. Last month, the state’s newly elected chief minister, Yogi Adityanath, said the government will ramp up procurement infrastructure and purchase 8 million tonnes at assured prices from farmers.

“Lack of logistics and storage facilities is proving to be a hurdle for Uttar Pradesh to ramp up procurement,” said Prerana Desai, vice-president, research, at Edelweiss Agri Services and Credit.

“Overall, we are sceptical if the food ministry will be able to procure the targeted 33 million tonnes,” Desai said, adding, “normally the process gets over by mid-May and we may see the government extending the deadline if actual procurement falls short of the target.”

Desai further said that due to favourable weather and higher sowing, India’s wheat crop may come in at a high of 97.7 million tonnes (2016-17), surpassing the agriculture ministry’s second advance estimate of 96.6 million tonnes.

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