India: Wheat procurement crosses 19 MT, enough for free ration

After a sluggish start following delayed harvest, the government agencies’s purchase of wheat in the current rabi marketing season – 2024-25 (April-June) have crossed 19.61 million tonne (MT), which is more than the annual grain requirement for all the welfare schemes including Pradhan Mantri Garib Kalyana Anna Yojana.

“We need around 18.4 MT of grain for social welfare schemes and any additional procurement in the current season would help us in carrying out open market sales to curb possible spike in prices,” Ashok Meena, chairman and managing director, FCI said.

The government to curb prices had sold a record 10 MT of wheat in the open market to weekly e-auction to bulk purchasers and flour millers in FY24.

Meena said the agencies are on track to achieve the initial projection of 30 to 31 MT of wheat purchase during the current season despite some concern about slow down in wheat arrivals in the mandi in Madhya Pradesh.

Sources said Rs 30,000 crore has been paid to more than 1.57 million farmers’s bank accounts so far against the wheat purchase of Rs 45,00 crore by the agencies.

While overall procurement of grain is down by 10% till Monday, officials attribute this to delay about 10 days in harvesting of crops especially in Punjab, Haryana and Uttar Pradesh. Five agencies entrusted with procurement in Punjab, the biggest contributors to central pool stock, set to procure a record 13 MT of wheat in the current season out of which 9 MT has been already purchased from the farmers.

Similarly, Haryana where 6.12 MT of wheat has been purchased under the minimum support price (MSP) operations is likely to contribute 7 MT of grain to central pool stock.

However Madhya Pradesh, which commenced MSP operations early, procurement has so far been 3.46 MT of wheat so far and the state is unlikely to achieve an initial projection of 8 MT of grain.

After achieving a record procurement 43.3 MT in 2021-22 season, the purchase by the government agencies under the MSP operations fell to record low of 18.8 MT in 2022-23 season. However, it rose by around 40% to 26.2 MT in 2023-24.

To boost purchases in Rajasthan and Madhya Pradesh where crops had been hit due to adverse weather conditions, the food ministry has relaxed the norm for grain purchase and the agencies will buy wheat if it’s “shrivelled and broken” up to 15% without value cut against normal criteria of up to 6%.

The limit of lustre loss of wheat is relaxed up to 70% without any value cut for Madhya Pradesh.

Wheat stocks in the central pool fell to a 16-year low of 7.57 MT on April 1 due to low procurement for the last two years, and aggressive sale of grains in the open market by FCI this fiscal.

The government has announced an MSP of Rs 2,275/quintal for the 2024-25 season which is an increase of Rs 150/quintal over the previous season. In addition, Rajasthan and Madhya Pradesh have announced a bonus of Rs 125/quintal as bonus over MSP.

According to Gyanendra Singh, director, Indian Institute of Wheat and Barley Research, based in Karnal, Haryana, wheat output this year 2023-24 crop year (July-June) is likely to cross the current estimate of 112 MT because of factors such as record sown area at 34 million hectare, longer winter season and no reports of disease outbreak.

Tags: Minimum Support Price, harvest, grain, wheat, purchase