The Hindu Business Line : M.P. farmers choose pvt trade for selling wheat

Dilemma for Govt
Arrivals in Rajasthan, Uttar Pradesh, Punjab and Haryana yet to begin.
Gujarat's stock limit order where one can't purchase more than 5,000 tonnes at one time.

Chennai March 21 Wheat procurement for buffer stocks has hit a hurdle in Madhya Pradesh with farmers preferring to sell their produce to private trade rather than Central agencies.

"Prices offered by private traders are higher than the minimum support price (MSP) offered by the procurement agencies," said Mr Sunil Mukhati, a farmer in Indore over phone.

Market prices

While prices are ruling at Rs 940-50 a quintal in mandis in Madhya Pradesh, the agencies procuring wheat for buffer stocks are offering Rs 750 as MSP plus Rs 100 a quintal bonus that was cleared by the Centre last week. The Centre plans to procure 150 lakh tonnes for buffer stocks.

"Wheat crop in Madhya Pradesh is good. We had timely rains and arrivals have begun. But we are watching the situation in Punjab and Haryana, where we have received reports of rains, which can play spoilsport," said Mr Mukhati.

The Government and trade officials are hopeful rains in the growing areas will not cause much damage. The Union Agriculture Secretary, Mr P.K. Mishra, has said wheat production would surpass 72.5 million tonnes (mt) this year against 69.48 mt last year.

Delay in arrivals

"There are a couple of reasons for the current situation in Madhya Pradesh. One, arrivals have begun only there, whereas in Rajasthan, Uttar Pradesh, Punjab and Haryana they are yet to begin," said a miller based in Tamil Nadu.

In view of the rains last week and now, arrivals in these States are likely to be delayed by 10-15 days. Therefore, private trade, going by reports, has gained the upper hand over procurement agencies in Madhya Pradesh mandis. Procurement in the other States will begin only from April 1.

Transportation

The other reason is the Centre's alleged directive to the Railways not to provide wagons for transporting private trade consignments. "It makes economic sense to buy wheat from Madhya Pradesh in that case and transport it by road to South," said the miller.

Trade sources said wheat could be currently procured from Madhya Pradesh and Gujarat only.

Gujarat order

"But the Gujarat has come up with the stock limit order where we can't purchase more than 5,000 tonnes in one stroke. Also, to move it out of the State, we will have to inform the State Government. To inform them and then begin moving the consignment, there will be a delay of two days. This is also a reason for private trade swarming the mandis in Madhya Pradesh," the miller said.

As such, wheat prices have begun to gain after the Centre announced the Rs 100 bonus over and above MSP last weekend. In New Delhi market, wheat (dara) was quoted at Rs 1,045-1,055 a quintal on Wednesday against Rs 1,030 on March 16, when the bonus payment was announced.

Raw material cost

"Flour mills will have to pay a higher price this year and things have only turned tough. Going by the hike in MSP and bonus for wheat, our raw material costs have increased by over 20 per cent," the miller said.

Though the Centre has suspended wheat futures, rates for contracts that had been opened before the suspension are ruling firm. April contracts were quoted at Rs 963 a quintal and May at Rs 955. The rates are Rs 30 higher than the ones that prevailed on March 16.