Govt mulls options to procure 15 mt wheat

After banning wheat exports as a precautionary measure, the government is considering a slew of actions to ensure that it procures enough wheat "" 15 million tonne for the current season. Besieged by political and economic compulsions, the government appears desperate for measures.

The prices are, currently, are expected to remain subdued, with new arrivals on the way. Early this week, the Centre had called a meeting of state food secretaries to take stock of the situation. A decision to procure 15 lakh tonne of wheat was also taken at this meet.

The government has asked multinational and private traders to cooperate with it. The government, it is learnt, has asked private and MNC traders to keep away from Punjab, Haryana and Uttar Pradesh and procure their requirements from other wheat-producing states such as Madhya Pradesh, Gujarat and Rajasthan. The government is expected to procure wheat from the three northern states.

The government is also considering the option of imposing country-level stock limits to keep private and MNC traders away from procurement.

It is also keeping the option of paying a higher bonus to farmers above the minimum support price (MSP), if the need arises.

Private traders such as Cargil, ITC and Adanis had huge set-ups in the northern belt to procure wheat. The government's proposed move to clamp on their procurement plans would put pressure on wheat prices, said an MNC trader.

Meanwhile, the deadline for private traders to import wheat at zero duty is set to expire by the February-end. The landed cost of imported wheat is around Rs 11,500 a tonne, which is higher than the domestic prices by more than 10 per cent.

"The government should extend the facility (zero-duty imports) by one more financial year," said Vijay Doshi, managing director of Coronation Agro Industries and leading flour miller.

Though imported wheat is currently costlier than wheat in the domestic market, Doshi opined that the new crop would hit European markets in July-August and imports might become viable in future, if prices then fell.

Extending the duty-free import facility for just a few months would add to uncertainty and traders would not be able to encash the opportunity as and when it came, he added.

If the government stopped private traders from procurement, farmers would then get a signal that something was wrong and they would hoard and sell only if the realisation was higher, he said.

Recently, the government released 4 lakh tonne for sale in the open market. But, prices in the Gujarat market were kept high at Rs 12,300 a tonne, noted Doshi.

The prices of new wheat arrivals in Saurashtra were lower than the government's price and the quality of wheat released by the government was also inferior, said Doshi.

He suggested that the government keep the price around Rs 9,000 a tonne to get desired results.