The Hindu Business Line : Pvt cos may have to buy more wheat from Punjab-Haryana belt

With dry weather impacting wheat plantings in central India, corporate buyers may have to secure a greater part of their requirement this time from the irrigated Punjab-Haryana belt.

During the recent rabi marketing season (April-July), private companies bought about 20 lakh tonnes (lt) of wheat. This included over eight lt by ITC; 3.2 lt by Cargill; 2.3 lt by AWB India; 1.6 lt by Britannia; 1.6 lt by Agricore; 1.25 lt by Delhi Flour Mills and 90,000 tonnes by Adani Enterprises.

Significantly, out of the 20 lt, roughly 7.2 lt were sourced from Madhya Pradesh alone, with Rajasthan, Uttar Pradesh and Gujarat accounting for 2.3 lt, 3.6 lt and 1.3 lt, respectively. The big corporates bought hardly 10,000 tonnes from Punjab and 60,000-odd tonnes from Haryana.

This is unlike the State agencies, which purchased well over 90 per cent of their 111 lt from just Punjab and Haryana. There are three broad reasons for this well-demarcated space for governmental and private sector buys.

Firstly, MP, Rajasthan and UP have a locational advantage in terms of transporting to the deficit southern, eastern and western markets. Private buyers in Punjab and Haryana are limited mainly to local flour millers.

Secondly, adding to the freight disadvantage are taxes and assorted levies (sales tax, mandi fee, arhtia commission, rural development cess, etc.), which come to 11.5 per cent in Punjab and 10.5 per cent in Haryana. This is against one per cent in Gujarat, 2.2 per cent in MP, 3.6 per cent in Rajasthan and 6.5 per cent in UP.

The third reason concerns quality, whether in terms of gluten and broken starch content or kernel hardness. “The wheat from MP scores on all these parameters, as it is largely rain-fed and more naturally forming,” notes Mr S. Sivakumar, CEO of ITC’s International Business Division.

Weather conditions

The problem this time though is poor rains and soil moisture stress, leading to a fall in wheat area by 38 per cent in MP and 63 per cent in Rajasthan. Particularly, affected are the soybean tracts of Malwa in western MP and south-east Rajasthan (Kota-Baran-Jhalawar) — from where the private corporates also source a big chunk of their wheat.

“The intention to sow is very high among farmers, but weather conditions have so far not been that supportive. I still believe that the final die is not cast and a clear picture will emerge in ten days time,” adds Mr Sivakumar.

Progressive acreage is also 40 per cent down in UP, where the main impediment has been delayed crushing by sugar mills. UP has some 25 lakh hectares (lh) under sugarcane, of which around 15 lh is the ratoon crop harvested during November-January.