UP wheat procurement hit as FCI starts open market sale at higher price

UP's wheat procurement target of 5.5 million tonnes likely to fall short by 25% at 4 MT

The decision of Food Corporation of India (FCI) to sell 10 million tonnes (MT) of wheat to bulk consumers under the open market sale (OMS) scheme this fiscal has hit wheat procurement in Uttar Pradesh, which is unlikely to meet its target of procuring 5.5 MT of the food grain in the current rabi marketing season.

“The OMS scheme has impacted wheat procurement in UP, since wheat-based industries are buying directly from the farmers as the minimum support price (MSP) in UP is much lower at Rs 1,840 per quintal against the OMS base price (Rs 2,080 per quintal),” a senior UP food and civil supplies department official told Business Standard on condition of anonymity.

Besides, some farmers are also holding on to their wheat stock, since they anticipate higher prices for their crop in subsequent months as was the case last year, he said adding wheat procurement during the current marketing season was expected to settle at 4 MT.

With less than 10 days left for wheat procurement season to end on June 15, the state government agencies have so far procured nearly 3.4 MT, which is 62 per cent of targetted 5.5 MT. Last year, UP had overachieved wheat procurement target of 5 MT by procuring 5.3 MT.

Under OMS, state-run FCI releases food grains at pre-determined prices in the open market to enhance supply of wheat and rice, especially during the lean season, to either moderate open market prices or offload excess stock.

FCI holds a humongous stock of 40 MT of wheat, including old stock of 16 MT and more than 24 MT of new grain procured during the ongoing procurement season in major wheat growing states, including Punjab, Haryana and Madhya Pradesh.

For the 2019-20 marketing year (April-March), FCI has set a wheat procurement target at 35.7 MT. A record 100 MT of the food grain was produced this year.  

The price of wheat being offloaded by FCI stands at Rs 2,080 per quintal and is scheduled to be revised in August. The price would go up to Rs 2,200 per quintal in the current fiscal.

This year, the UP government had fixed 10 per cent higher wheat procurement target of 5.5 MT compared to 5 MT during 2018 rabi marketing season. Every year, wheat procurement season commences on April 1 and continues for two and half months till June 15, 2019.

So far, 680,000 farmers in UP have been paid Rs 6,300 crore against wheat purchase by the state agencies at more than 6,700 procurement centres.

Procurement of paddy and wheat had clocked robust figures under the BJP government, which came to power in March 2017. In 2017, the state registered wheat procurement of 3.7 MT compared to 0.8 MT in 2016, thus registering a quantum jump of 460 per cent, which further rose by 43 per cent to 5.3 MT in 2018.