Russia-Ukraine crisis likely to impact UP's wheat procurement plan

Wheat market prices higher than MSP; UP targeting to buy 6 MT

The surge in domestic and global market prices of wheat following the conflagration between Russia and Ukraine, two of world’s major wheat exporters, is likely to hit the Uttar Pradesh wheat procurement plan.

The Yogi Adityanath government 2.0 is targeting to procure 6 million tonnes (MT) of wheat in the coming rabi marketing season commencing April 1 at the minimum support price (MSP) of Rs 2,015 per quintal (100 kg).

However, the prevailing market price of the commodity is hovering around Rs 2,200 per quintal, while the prices could possibly rise further in the coming weeks depending on how the Russia-Ukraine crisis unfolds.

Recently, Chief Minister Adityanath directed UP agri marketing officials to operationalise 6,000 procurement centres to buy wheat from farmers during the coming rabi marketing season from April 1 to June 15.

Although the government has hiked the MSP by Rs 40 this year from Rs 1,975 per quintal to Rs 2,015 per quintal, the prevailing market price is nearly 10 per cent higher than the MSP to be offered at the state run procurement centres.

As such, the state farmers are likely to gravitate towards buyers who offer remunerative prices.

Besides, the primary purpose of the MSP mechanism is to ensure that the farmers get a minimum price guarantee, and that they are able to weigh their options if offered higher prices for their farm produce.

Together, Russia and Ukraine exports supplement 25 per cent of the global wheat shipments annually with Russia accounting for the bulk of 18 per cent. Their main wheat export destinations include Thailand, Turkey, Nigeria, Indonesia, Yemen etc.

Since the start of the war, the wheat exports from these two neighbouring countries have been impacted substantially owing to various factors, including sanctions, logistics, insurance, payments etc.

In such a dynamic scenario, Indian agro marketers and exporters are looking to fill the vacuum in the global wheat supply chain through aggressive procurement domestically as well as tying up with foreign entities.

According to reports, India is eying wheat exports worth 8-10 MT in the current season if the Russia-Ukraine crisis persists.

Nonetheless, the UP food marketing department is drawing up an elaborate plan for a seamless procurement season, which plays a key role in communicating the pro-farmer policies of the state government.

“The prevailing domestic wheat market prices are higher than the MSP, but institutional procurement is important in perking up demand and keeping the prices stable,” a senior UP food department official said on condition of anonymity.

Moreover, the procurement figures of wheat and paddy as well as total payments to farmers are amplified by the governments of the day during elections to woo the farm community.