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Our Bureau

Ending procurement encourages farmers to come out with stocks

Chennai , May 25

Wheat supplies, especially for bulk consumers such as flour mills in North India, have improved this week, with prices also falling marginally on increased arrivals.

This is primarily since the Central and State Government agencies involved in procuring wheat for buffer stocks have called off their operations, thus giving some relief to growers and traders. Till last week, growers and some traders, who held significant stocks, were under pressure to deliver to the Government agencies. "With that pressure off now, the farmers and traders are moving their stocks, particularly to Delhi," said Mr Vinod Kapoor, President, Wheat Products Promotion Society.

As a result, wheat (dara) for mill delivery has declined to Rs 875 a quintal against Rs 900 two weeks ago. "The point is that two weeks ago, wheat was not available at this price. Now, we are getting supplies at prices lower than that," said Mr Anirudh Agrawal of Agra Flour Mills.

In New Delhi, wheat (dara) was quoted at Rs 845-849 against Rs 857-860 on Wednesday. In Hapur, it was quoted at Rs 825-830. Last week, the same quality wheat ruled around Rs 870 in New Delhi and over Rs 850 in Hapur.

In the futures market, wheat for June delivery was quoted at Rs 897 a quintal on NCDEX and Rs 897.30 on MCX.

Pressure from States

One of the significant reasons for farmers to hold back their stocks was the pressure exerted by some of the wheat-growing States. Uttar Pradesh, for example, fixed a ceiling for purchase by private traders and big corporate firms. According to trade sources, these players were even discouraged to make purchases. The State Government also tried to entice growers by assuring licences for arms if they sold the wheat to the procurement agencies.

"The State Government may give arms licence but still, the growers will have to go to the police and then buy arms. For them, it made sense to sell wheat at higher prices than get a Rs 20,000-worth licence free," said a corporate firm official, who did not wish to be identified.

Despite its best efforts, Uttar Pradesh has been able to procure a meagre 38,995 tonnes against a target of 25 lakh tonnes (lt). Last year, it managed to procure 4.68 lt. Arrivals in the State this year at various mandis have been put at 8.62 lt against 5.26 lt last year. Uttar Pradesh called off its procurement operations on Tuesday.

Growers more flexible

On the other hand, the Government agencies have been able to buy significant quantities of wheat in Punjab and Haryana, especially from areas where the infrastructure is weak. In all, the Food Corporation of India has procured close to 93 lakh tonnes. The Union Food and Agriculture Minister, Mr Sharad Pawar, has said wheat procurement may not exceed 95 lt. This is against 140 lt procured last year and a target of 160 lt fixed by his Ministry.

"Initially, when the growers saw so many buyers, they tended to hold back awaiting good prices. Now with buyers off the scene, they are not only coming forward to sell but are also flexible in their offer rates," Mr Kapoor said.

"Had the Centre come up with a higher minimum support price (MSP), it would have procured more for buffer stocks. If it can pay Rs 950-odd for imported wheat, then why not at least Rs 850 for our farmers? It would have helped all," trade sources said.

Initially, the Centre announced Rs 650 a quintal as MSP and subsequently, came up with Rs 50 bonus. Despite this, the growers held on to their stocks. They were also encouraged by the Food Ministry's move to import 30 lt wheat and firm December contract prices. On Thursday, wheat for December delivery was quoted at Rs 1,012 a quintal, much lower than Rs 1,078 quoted a fortnight ago.

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