The Hindu Business Line : Few problems seen for FCI, pvt trade in buying wheat

Tough stand
Resistance from farmers in Madhya Pradesh to give wheat to FCI because of higher prices offered by private trade.
Farmers' expectations with regard to price have to be met.

Chennai April 3 The Centre is likely to get enough wheat for buffer stocks, while the user industry could also get the required amount of the grain this year. This is in view of a better crop even as arrivals have begun in the markets.

"Both the Centre and private trade are likely to get the wheat they require this year. While the Centre could get its required quantity from Punjab and Haryana, the private trade may get stocks from States such as Madhya Pradesh, Rajasthan and Uttar Pradesh," said a North Indian miller.

According to Mr Vinod Kapoor, President, Wheat Products Promotion Society, there should be no difficulty for anyone to get wheat this year. "The crop is looking good and could be around the Union Government's estimate of 72.5 million tonnes, provided there are no undue developments in weather," he said.

Reports from across the wheat-growing States point to a good crop.

Good crop forecast

"Wheat production in Madhya Pradesh is good," said a farmer, Mr Sunil Mukhati from the Malwa region of Madhya Pradesh.

Despite reports of good arrivals, Food Corporation of India (FCI) is reported to be facing problems in procurement of wheat.

"There is resistance from a section of farmers in Punjab and Haryana led by the Bharat Kisan Union. But that shouldn't stop FCI from getting the required stock since the problem could get solved," said Mr Kapoor.

"We are not giving wheat to the FCI because private trade is offering higher prices," said Mr Mukhati. He also quoted examples of how a few farmers in Madhya Pradesh had sold 2-3 tonnes of wheat each at around Rs 1,000 a quintal.

"We are, however, holding back about 75 per cent of what we have produced," he said.

While there should be no problem in getting wheat, FCI and private trade acknowledge that they will have to meet the expectations of the farmers with regard to the price.

Buffer stocks

FCI usually buys for buffer stocks from Punjab and Haryana. This year, it has a target to buy 151 lakh tonnes and it is confident of meeting the target. This time, it also goes into the market confident of the fact that buffer stocks are higher at 50 lakh tonnes as on April 1 compared with 20 lakh tonnes during the corresponding period last year.

Most of the stocks are reported to be in the South having being imported from Australia and Black Sea origins and nearer to ports.

Last year, it was able to procure only 92.26 lakh tonnes against a target of 160 lakh tonnes. This was because production was hit by adverse weather and slid to 69.38 million tonnes last year.

According to Mr Pramod Kumar of the Bangalore-based Sunil Agro Ltd, private mills would prefer to buy from Madhya Pradesh, Uttar Pradesh or Rajasthan.

"The State levies are less in these States compared to Haryana and Punjab," he said. The other factor going in favour of these States is quality of the grain. Also, it would be easy to transport to southern States from markets in Madhya Pradesh.

Besides, Gujarat's move to clamp stock limit under the Essential Commodities Act has also forced private players to look at these three States.

Mr Vinod Kapoor said, "Now, even the Delhi Government has clamped a stock limit. It has said we can have stocks required for only 15 days of our requirement. This could make things difficult for the mills."

Downtrend in prices

Meanwhile, wheat prices continue to decline on increasing arrivals. On Tuesday, it was quoted at Rs 975-995 a quintal, down Rs 20 from Monday.

On NCDEX, wheat for delivery in April was quoted at Rs 1,015 a quintal, while it was Rs 950 for May, Rs 970 for June and Rs 998 for July. Though wheat futures have been suspended, market participants are allowed to square off the positions they have taken.