Wheat procurement by the Food Corporation of India (FCI) is yet to start due to low arrival of the crop in the market following recent rains which delayed the harvest. Now that Madhya Pradesh and Rajasthan both have declared bonus over and above the MSP, the concentration of traders and stockists will move to Uttar Pradesh and Bihar to get the grain around the benchmark price if not less.

Only Uttar Pradesh had agreed to start procurement from March 1 while Rajasthan had agreed to begin from March 10 and no crop has been procured, so far, trade sources said. Though, the Madhya Pradesh government had earlier informed that the procurement could begin from March 22, there might be an early start from March 15 as arrivals have started, the sources said.

Procurement target 33.4 mt?

Though the Centre has said it plans to buy 30-32 million tonnes (mt) of wheat in the procurement season starting April 1 by starting the purchase a month earlier, recent rains have delayed the arrival and now in most of the states the momentum of arrival will pick up from April first week, traders and millers said. However, in Rajasthan, the wheat arrival to gain pace after March 25, the sources said.

It is learnt that the procurement target may be fixed around 33.4 mt as States had informed that they could together contribute 36.7 mt of wheat to the Central Pool in 2024-25. The Agriculture Ministry has pegged this year’s wheat production at record 112.03 mt, out of which Uttar Pradesh is to produce 35.48 mt, Madhya Pradesh 23.48 mt, Punjab 16.13 mt, Haryana 11.21 mt, Rajasthan 10.42 mt and Bihar 6.33 mt. The harvest is expected to decline from last year only in Rajasthan, Bihar and Maharashtra, while other States among major growers may report higher production.

In 2023-24 season, the government had procured 26.2 mt of wheat out of the targetted 34.15 mt and in 2022-23 only 18.8 mt was bought for the Central Pool against the target of 44.4 mt.

Higher than MSP

Amid depleting stock of wheat in Central Pool after release of 10 mt in open market through weekly auction at subsidised rates, the current year’s procurement is very crucial for the government. Though it is confident to buy more than the annual requirement of 18.4-19 mt, higher stocks will help it contain market prices.

Currently, wheat prices are ₹80-150/quintal higher than the MSP of ₹2,275 after both M.P. and Rajasthan announced a bonus of ₹125/quintal. In M.P., even the average quality crop with 16 per cent moisture level is selling at ₹2,350 and if Uttar Pradesh declares a similar bonus, the traders and stockists will have to offer more than ₹2,400/quintal to buy any grain, said a flour miller.

According to official data, the Centre has 9.69 mt of wheat as of March 1, which is the lowest since 2017, when the stock dropped to 9.43 mt (as of March 1) from 16.87 mt in the same period in 2016. The buffer norm of wheat as on April 1 is 7.46 mt against which the stock with FCI was at 5.8 mt in 2008. After that it was marginally higher than buffer norm, at 8.06 mt in 2017 and 8.35 mt in 2023.

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