The private wheat buyers are likely to go slow on wheat purchases when the new crop arrives in the grain mandis this April. Projections of a bumper wheat harvest and a huge surplus with the government provides little incentive to the private traders to purchase wheat.
While during the last procurement season, private traders were apprehensive of the government’s anti-inflationary measures and preferred to stay away from the mandis, this time the reason is different — they do not anticipate major gains.
“There is surplus stock with the government and the crop prospect is good. This would mean a supply of wheat in the market throughout the year and a significant price rise has been ruled out. Therefore, private trade has little incentive to invest in wheat purchase,” said an official with a grain trading company.
Notably, private wheat procurement had stoked several controversies during the 2006-07 season as the government purchase slipped to a 10-year low of 9.2 million tonnes and forced the country to import wheat at high prices.
The private wheat purchase this time would be limited to actual users like the flour millers, biscuit and bread manufacturers, he added. Companies like ITC, Britannia and
Parle do direct wheat procurement for end products like flour and biscuits. During the 2007-08 rabi season (April-March), the declared purchase by private companies stood at 1.71 million tonne.
More From This Section
“I do not see private traders participating in wheat purchase in a big manner this year. There is an export ban and the international prices are low as well. Moreover, the huge stocks with the government could drive the market price below the MSP,” said Ashok Gulati, Asia director of International Food Policy Research Institute.
As on January 1, wheat stock in the central pool stood at 18.21 million tonnes, up over 136 per cent from last year’s corresponding position. This stock is more than double compared to the buffer stock norm of 8.2 million tonnes for the period.
This comfortable stock position also means that the minimum support price (MSP) of wheat would not see a sharp increase as it did last year when it was raised to Rs 1,000 from Rs 750 a quintal.