Wheat crisis hits flour industry

The impending wheat crisis arising from continual low production of this staple crop in the state has begun to show its effects on the cost of wheat flour in Uttar Pradesh with the Agra flour mills raising the prices of "Atta" by Rs. 2-3 per kg. in the past week.

With the state government finding itself helpless without any enforcement powers, in controlling the wheat availability and the purchase of wheat from the open market in the state by MNCs, the crisis for food grains could seriously affect the budget of a middle-class family this season.

According to the state agricultural department sources, the minimum support price purchase scheme of the government had failed due to one basic flaw, when the state government was offering a minimum support price of Rs. 650 per quintal of wheat, the prices in the open market for the food grain was between 800-1000, prompting the farmers to sell their produce in the open market instead of selling it to the government.

As a result, the government could purchase only 5 lakh metric tonnes of wheat from the farmers against its target of 27 lakh tonnes in the last Rabi season and even this time, when the produce of wheat was expected to be lower by almost 25 percent than the targeted produce of over 300 lakh metric tonnes, there was not even a ghost of chance that the farmers would consider selling their wheat to the government agencies, when they are being given lucrative offers by MNCs who have made purchase promises to the wheat stockists in advance.

Notably, most of the market for wheat flour in mid-segment cities like Agra is through the hundreds of neighbourhood flourmills spread out in the city and its satellite rural areas. These flour mills thrive mainly on the wheat made available either by the wheat stockists or through the state government agencies.

But this time, when the MNCs have already fixed a high ceiling for the purchase of wheat, the local flour mils have also been forced to raise the rates by almost Rs. 2 per kg. and currently, while branded flour was selling at as high as Rs. 17 per kg. against the earlier rates of Rs. 13-14, even the local flourmills were selling wheat flour between Rs. 12 "� 13.5 per kg.

Lakshmi Narain, the owner of "Bansi" brand flour mills in Agra said that till a couple of weeks back, "Atta" was selling between Rs. 95 "� 110 per 10 kg., the rising prices of wheat had forced them to raise the prices of wheat flour by Rs. 115-125 per 10 kg.

He said that the price rise had not yet been stabilized and it would continue to rise unless the state government re-established its control on the wheat market of Uttar Pradesh.