The government’s procurement of wheat has crossed the minimum threshold quantity required to cater to all welfare schemes despite a delayed start, including distribution of free grains to nearly 800 million beneficiaries under the National Food Security Act, and authorities said they were on course to achieve grain-stocking targets for 2024.
A longer-than-usual spring that delayed harvests, untimely rains in some states and a smaller crop in Madhya Pradesh, the largest wheat grower, led to a sluggish start to procurement, critical for overall food security of the world’s most populous nation. Procurement refers to purchases of grains by the Food Corporation of India (FCI), the Centre’s main grain-handling agency, at federally determined floor prices.
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“Wheat procurement is going on smoothly. Our requirement for all welfare schemes, including Pradhan Mantri Garib Kalyan Yojana, is about 18.4 million tonnes-18.6 million tonnes. Currently, total procurement has reached 19.6 million tonnes. This is a very favourable level of procurement compared to our operational requirement,” FCI chief Ashok KK Meena said. To allow farmers sufficient time to sell to the government, procurement will be open beyond May, he said. “We are on track to meet the wheat procurement estimate,” Meena added.
The FCI chief said the government also had 53 million tonnes of rice (including 21 million tonnes of unmilled paddy), nearly four times the buffer requirement of 13.5 million tonnes as on April 1.
Sufficient procurement is critical this year to help India, also the world’s second biggest wheat consumer, replenish depleted stocks, which have hit a 16-year-low. The draw-down in stocks is the result of the government dipping into its reserves to sell a record 10 million tonnes of wheat in the open market over the past year to cool prices.
To be sure, while the government has procured nearly 20 million tonnes and the threshold minimum requirement is 18.6 million tonnes to fulfill obligations under all welfare schemes, the government will still need at least 6-8 million tonnes of stocks to be able to intervene in markets to stabilize prices in case of high cereal inflation, past trends show.
In 2022 and 2023, heat waves linked to climate change crimped wheat output in the country, prompting it to ban export of wheat, apart from rice and onion. If state-owned stocks are plentiful this year, it will also help to bring down wheat prices, which have been elevated, lifting overall food inflation.
The average wheat procurement by the world’s second-biggest producer in the past decade has been about 31.5 million tonnes and, this year, the government estimates to procure a similar quantity. Wheat is sown in November and harvested in March-April.
As on April 1, the government was required to maintain 7.4 million tonnes of wheat as mandatory buffer, while actual stocks on that date were barely above that limit at 7.5 million tonnes.
This year’s estimate for total procurement at 31 million tonnes is about 19% higher than the actual procurement of 26.2 million tonnes last year.
Output and quality of the grain in northern foodbowl states, such as Punjab, Haryana, Uttar Pradesh and Rajasthan, are robust and should exceed last year’s levels, according to officials. However, a smaller crop this year in the biggest wheat-producing state, Madhya Pradesh, has been a “cause of concern”, a second official said, requesting anonymity.
Rains during early stages of crop in November and December and diversion of acreage towards gram may have led to lower wheat output, the second official said.
According to latest government data, Punjab has so far procured 9.3 million tonnes. FCI, the government’s main grain-handling agency, expects the state’s total purchases of grain to touch 13 million tonnes compared to last year’s 12.2 million tonnes, the first official cited above said.
Haryana, another major wheat grower, has purchased 6.1 million tonnes of wheat so far and total procurement is set to cross 6.8 million tonnes, the data showed.
“Whether the government will be able to meet its procurement estimate of 31 million tonne will depend on how market dynamics play out. If wheat prices go above minimum support prices, then farmers will prefer selling to private traders,” said Abhishek Agrawal, an analyst with Comtrade.
