Wheat procurement norms favour ITC, Cargill: UP traders

The UP government has given permission to large agri-business companies to buy wheat directly from farmers and this has led to massive setback to the trade structure that has evolved over 10 years.

Four-time Lok Sabha member and trader Shyam Bihari Misra told Business Standard the business of wheat wholesalers had dwindled to one-fourth of what it was in the city.

"In an act of direct discrimination, companies like Cargill, ITC and others can buy wheat directly from farmers, which we are not allowed to. We have to go through the auctions of the mandi adhikari," he said.

Another discriminating factor is the allotment of specific mandis for each trader and that he can trade in only one mandi, a condition which does not apply to the large wheat-purchasing companies.

"Earlier, there was a stock limit for each trader to prevent hoarding and check price rise. But now large companies are being allowed to hoard as much as they want, with deleterious effects last year," Misra said.

These companies bought at Rs 6.5 per kg and they did not sell it till the price reached Rs 11. But small traders sell at every point, because they do not have storage capacity.

Misra said this year things were going to be much more difficult, because output was expected to be lower this year. The state government requires about 600,000 tonnes for the PDS. Learning from last year's experience farmers are in no hurry to sell their crop and the purchase is being done at Rs 7-7.50 per kg. A major rise in the prices is on the cards.