Record wheat output expected, arranging storage for harvest a worry

India is expected to harvest 291.95 mt of foodgrain in 2019-20

India is expected to produce record 106.21 million tonnes (mt) of wheat in the crop year 2019-20, according to the second Advance Estimates released on Tuesday.

Managing wheat stocks in warehouses and arranging storage for this bumper harvest, which is set to far exceed demand, could be one of the many challenges the government might encounter in 2020-21 unless quick measures are taken to liquidate a big portion of the stock in the coming months, said experts.

The data released on Tuesday showed estimated wheat production in the 2019-20 crop year, which started in July 2019, is 2.61 mt more than the 2018-19 harvest and 5.71 mt more than the target for this year.

Assuming that almost 30-35 per cent of this huge production has to be purchased by state-run Food Corporation of India (FCI) and state agencies from April 2020, as has been the norm, almost 28-37 mt will be added on to the existing inventories. In the 2019-20 marketing year (April to March), FCI and state agencies together purchased around 34.12 mt of wheat from farmers. This could further stretch the already precarious financial position of FCI, which, according to the 2020-21 (FY21) Budget document, is projected to borrow 24 per cent more in FY21 at Rs 1.36 trillion from the National Small Savings Fund.

The data showed that total foodgrain stock (wheat+rice) in the central pool as of February 7, 2020, was estimated to be around 57.81 mt, of which wheat stock was estimated to be 30.36 mt, a whopping 124 per cent more than the requirement. Rice stock was estimated to be 27.41 mt, a staggering 260 per cent more than the required stock position on January 1 each year. 

As of January 1, FCI, along with state agencies, had around 75.81 mt of storage space available with them, of which 62.64 mt is covered storage space, while another 13.20 mt is covered area plinth (CAP). In 2019-20 (FY20), the Centre is projected to allocate 60.39 mt for targeted public distribution system (PDS) and other welfare schemes, far less than the quantity procured.

Meanwhile, the second Advance Estimates show that among other major rabi crops, production of gram is estimated to be 11.22 mt, up 12.80 per cent from last year. Output of mustard, the biggest oilseed crop grown during the rabi season, is projected to fall marginally to 9.11 mt, down 1.54 per cent from last year.

Total rabi foodgrain that also includes pulses and coarse grains, according to the second Advance Estimates, was projected at 149.60 mt, up 4.10 per cent than last year. Together with kharif foodgrain production, India is expected to harvest 291.95 mt of foodgrain in FY20, which is 2.36 per cent more than 2018-19.

The government has also marginally lowered its kharif production estimates for FY20 for pulses in the second Advance Estimates, from the first Advance Estimates released in September last year.

According to the latest data, the production of pulses in the FY20 kharif season is estimated at 7.92 mt, down from 8.23 mt in the first Advance Estimates as urad production is now estimated at 1.72 mt, down from 2.43 mt in the earlier data.