Lower market arrivals raise questions

Even as the UPA-II regime prepares to sign off with the country’s foodgrain production projected to touch a record 263.2 million tonnes (mt) in 2013-14, question marks are now being raised on these estimates.

A key source of the doubts being expressed by some analysts relates to the trend in market arrivals, especially with regard to paddy. The Agriculture Ministry has estimated rice output to be at an all-time-high of 106.19 million tonnes (mt), as against 105.24 mt for 2012-13.

But this is not being reflected in the official data on arrivals in the mandis. The current marketing season, which runs from October to September, has seen only 49.9 mt of paddy arrivals till now, which is below the 52.7 mt for the same period in 2012-13.

Arrivals have fallen in all major States, barring Chhattisgarh (see table).

Even for wheat, where the marketing season starts from April, the cumulative arrivals so far, at 11.52 mt, have been less than the 15.77 mt during the corresponding period last year. This year’s wheat crop, too, has been officially placed at 95.6 mt, against 93.51 mt for 2012-13 and the previous record of 94.88 mt in 2011-12.

“In wheat, one could at least say that harvesting has been delayed due to unseasonal rains. But this cannot apply to paddy, where the marketing season started in October. The higher production should have therefore been reflected in market arrivals by now,” said a trade source.

Asked about this, Agriculture Commissioner JS Sandhu said: “We are aware of the lower market arrivals trend”. However, he maintained that it wasn’t indicative of any production decline.

“There was some crop damage in Odisha and Andhra Pradesh because of the cyclone and excess rains. But overall acreage was more this time. Besides, we expect the rabi paddy crop to be higher,” he added.

Sandhu attributed the lower mandi arrivals to off-market purchases from farmers by rice mills, a view also echoed by Ashok Gulati, former Chairman of the Commission for Agricultural Costs and Prices. According to him, millers were probably contracting directly with farmers to cater to demand from exporters.

“In Chhattisgarh, the State Government has announced a ₹270/quintal price over and above the Centre’s minimum support price of ₹1,310 for common-grade paddy. As a result, all the grain there is coming to the mandi, unlike in States,” Gulati told Business Line.

But if foodgrain production turns out lower it would be unusual, given that 2013-14 saw India receiving above-normal rains unlike what is being projected for the current year.

Overall rain was surplus not only in the main monsoon season from June-September (plus 6 per cent), but even the post-monsoon (plus 61 per cent in October-December) and winter (13 per cent in January-February).

(This article was published on April 24, 2014)
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