The Hindu Business Line : Centre pins hopes on UP for buffer wheat stocks

Chandigarh April 23 With farmers in Punjab and Haryana refusing to play ball, the Centre is now setting its sights on Uttar Pradesh (UP) to deliver sufficient wheat to mitigate the current procurement crisis.

For a start, the UP Government - possibly at the Centre's instance - has informally banned loading of wheat in rail rakes. "Only three rakes have been moved from UP so far this time. There was a fourth rake that was being loaded a few days back at Shahjahanpur by a big multinational firm. The party was, however, forced to offload the consignment by the concerned district food officer," according to sources.

Movement curbs

The State Government has further imposed movement restrictions. If wheat is apparently taken out of UP, the consignor has to deliver 10 per cent of the quantity as levy to the Government at the official price of Rs 850 per quintal. All these restrictions - nothing on paper - have put off large buyers, who prefer moving grain in 2,500-tonne rakes rather than in 10-15 tonne trucks.

Corporate purchases are, therefore, taking place mainly in Madhya Pradesh (MP), Rajasthan and Gujarat. Glencore, for instance, is buying largely from Gujarat, while Cargill and Ruchi are sourcing from the Bundi-Kota belt of Rajasthan. AWB is similarly focussed on Gujarat and MP.

Cost difference

"If a miller in Bangalore brings wheat from Indore or Mandsaur in MP, the transport cost would be Rs 125-135 per quintal by rail and Rs 165 by road. However, since one has to pay an additional Rs 15-16 to load wheat from the mandi to the railhead and a similar amount for unloading from the goods shed to the mill, there is no effective cost difference. But beyond MP, the mode of freight obviously matters," the sources added.

Farmers' reluctance

As the private trade has confined itself this time to MP, Rajasthan and Gujarat, it has vacated the Punjab-Haryana-UP space to Government agencies. In Punjab and Haryana, the problem is not competition from private buyers as much as the farmers' reluctance to sell. Even assuming that they will eventually be forced to sell, procurement may not cross 70-75 lakh tonnes (lt) in Punjab and 30-35 lt in Haryana.

If the Centre is to reach anywhere close to its target of 150 lt, it would then have to procure at least 30 lt from UP. As on Monday, total procurement has reached 58.79 lt (against last year's corresponding 77.56 lt), including 39.62 lt (57.30 lt) from Punjab and 18.89 lt (20.09 lt) from Haryana.