Centre may buy 11 mt wheat

Procurement is 4 mt lower than the targeted 15 mt.

The Union government's 2007-08 rabi wheat procurement is likely to end with a purchase of 11 million tonnes, 4 million tonnes lower than the target of 15 million tonnes.

Arrivals across the various mandis so far have been 14 million tonnes compared to last year's corresponding figure of 13.8 million tonnes. The trend of arrivals indicates that the crop size may be lower than the agriculture ministry's third advance estimate of 73.7 million tonnes.

"The Food Corporation of India (FCI) along with other agencies has bought 10.4 million tonnes of wheat compared with last year's corresponding figure of 9.1 million tonnes. As arrivals of 35,000-40,000 tonnes will continue from Punjab and Haryana for about a week, the final purchase may be about 11 million tonnes," said Alok Sinha, chairman and managing director of FCI, government's foodgrain procurement agency.

Arrivals indicate that wheat crop could be lower than what has been estimated. Even the private trade sees wheat output at 72 million tonnes. Farmers, for sure, cannot hold back such large stocks, he said.

According to the third advance estimates of the agriculture ministry, wheat production will be 73.7 million tonnes, against 69.5 million tonnes last year.

On reports that the government may withdraw Rs 100 a quintal bonus after May, Sinha said, "As of now, the government plans to end the bonus in Punjab and Haryana on May 31, while it will continue till June 30 in Uttar Pradesh and till July 15 in Bihar."

The government had anticipated that procurement will fall short of target and had therefore floated tenders for importing 1 million tonnes. It has also bought a 2 million tonnes wheat option in the international market, details of which are not available.

So far, the government has taken many measures to ensure adequate procurement of wheat in 2007-08. It banned futures trading in wheat, stopped exports and extended duty-free import for calendar year 2007.

It has also made declarations compulsory for purchases exceeding 50,000 tonnes by a company or an individual, and empowered state governments to decide stock limits in commodities.

The minimum support price (MSP) of wheat was hiked from Rs 650 a quintal last year to Rs 750.

A bonus of Rs 100 a quintal over the MSP was declared, in effect increasing the purchase price to Rs 850.