Chennai, May 1st
As government officials at the center say wheat production this year could be 8-10 million tonnes lower than initial estimates, the Food Corporation of India (FCI) and other government agencies may find it difficult to procure 20 million tonnes (mt) of grain themselves in the current rabies marketing season. This is less than 50 percent of the 44 mt target set for wheat purchases.
With the crop dwindling in excess heat seen since the second week of the market, production is likely to be lower than the record of 111.32 mt estimated by the Ministry of Agriculture last month. Stakeholders in the wheat industry are divided in their views on wheat production.
Pessimistic views set the production at around 95 mt, while the optimistic outlook is that it could be around 105 mt. Part of the farmers Business line spoke with in Punjab and Haryana says that their production this year is 10-15 percent lower than normal. Both states produce nearly 28.5 mt of wheat annually.
This is not the only reason FCI procurement has been affected this year. Reports from states such as Rajasthan say private traders have been proactive in procuring wheat at the farm gate for growers, offering the minimum support price of ₹ 2,015 a quintet or slightly higher.
Private traders procure wheat to export the grain, as Indian wheat is in demand in South, Southeast Asia and West Asia in addition to North Africa in light of the Ukraine war. Russia and Ukraine meet nearly 30 percent of annual global demand, and the conflict has affected supplies from both nations.
The second reason is that farmers are looking for higher prices. It told a farmer in Madhya Pradesh’s Dewas district Business line he would wait for wheat prices to rise by at least INR 500 per tonne. fifth before selling the 100 tons he has produced. Another in Haryana, who has sold some of his products at a higher price than MSP, said he would sell the rest only after five months. All of these have affected FCI procurement this year.
According to official data, the FCI has purchased 16.9 mt of wheat until April 30, down 39 percent from 28.03 mt in the same period a year ago. This fall now worries stakeholders.
When wheat was in demand for export, officials had scaled down their prospects for procurement to 34 million. Then, when looking at the response to FCI procurement, they expressed fears that procurement would only be around 25 mt. But stakeholders see it even lower now.
“It seems we can only procure 18-19 mt now on arrival,” said a miller, who did not want to be identified.
“The maximum FCI can provide this year could be 20 mt,” said Delhi-based exporter Rajesh Paharia Jain.
A trade analyst based in New Delhi said procurement could reach 22 mt if the FCI and procurement agencies make a little more effort.
FCI currently has 35.8 mt of wheat stocks, including 18.9 mt transferred from last season. The transfer stock is the lowest since 2018.
According to officials, the annual wheat extraction under various welfare schemes in 2021-22 was 29.47 million. tonnes, including 21 mill. tonnes under the National Food Safety Act and 6.34 mill. tonnes under the open market sales scheme. An additional 18.72 mt was distributed free of charge under Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).
It is likely that the center may discontinue OMSS, traders said. Even if PMGKAY is discontinued after September, the government will still need a total of 32.5 mt of wheat for the entire fiscal policy. It would also be necessary to carry 4.46 mt operational stock and 3 mt strategic reserve. This brings the total wheat required for public use up to 40 mt. If the FCI ends up procuring 20 mt of wheat in total this way, it would have to go tight.
“It may be tight, but looking at what the center did during Covid-19, when it ensured no one died of starvation, it is possible that a fixed amount of wheat can be procured at a higher price,” the analyst said.
“Although this government is right-wing politically, the left is economic,” he said.
Jain said the center could suspend PMGKAY if total stocks with FCI are limited to around 35 mt and could choose to meet future demand with rice, which is available in abundance.
In light of this, India must now at least partially abandon its ambition to “give birth to the world”.
“When wheat exports are above 10 mt, the center can impose a tax on wheat exports,” Jain said.
The analyst said Prime Minister Narendra Modi may have been misled as to the availability of wheat when he made the statement that India became a “. anna data”For the world.
“India must not continue to export more than 10 mt seriously,” he said.
At least 2 mt of wheat is estimated to have been exported in April, Jain said.
Pramod Kumar, vice president, Roller Flour Mills Federation of India, said May 10 will be the decisive day when the wheat scenario will unfold in full. “It is usually the last date of arrival. The government will probably wait until then to see how things go with procurement. Based on the situation, it could take measures to ensure domestic availability,” he said.
(With input from Prabhudatta Mishra)
May 1, 2022