Wheat procurement picks up but may face headwinds in some states

With Madhya Pradesh and Haryana, two big wheat procurers, expecting some revision in their purchase plans this year owing to farmers getting more than the minimum support price (MSP) from private players and the impact of rain in March on final yields, all eyes are now on the Central target of buying 34.2 million tonnes for the central pool in FY24.

After an initial lull, procurement has picked up steady pace in the past few days and, according to news agency PTI, till last week, the government procured 11.1 million tonnes in the 2023-24 marketing year (April-March), up from the 9.9 million tonnes in the year-ago period (up 12.12 per cent), according to the food ministry data.

“Wheat procurement is progressing smoothly,” a senior food ministry official told PTI.

By all reckoning, a situation akin to last year, when procurement for the central pool dropped to a multi-year low of around 18.79 million tonnes, is ruled out because the ban on exports is still in force; there is no added pressure from the Pradhan Mantri Gareeb Kalyan Yojana, which has not been extended after December 31; and the crop size is on the higher side than it was last year.

These factors, traders said, will bring more wheat to domestic supplies and ensure higher than FY23 procurement in the central pool. 

In Madhya Pradesh, official sources said the state government hoped to purchase 7-8 million tonnes against an earlier target of 10 million tonnes, while in Haryana news reports said the state government expected procurement to be 6.5-7.0 million tonnes against the earlier target of 8.5 million tonnes.

“The market rate for even slightly better wheat is higher than the MSP in MP, which is why many farmers have not yet bought their produce to procurement centres though harvesting is steadily on,” a senior state government official said.

He said till the middle of last week, daily wheat arrivals in the state were 200,000-250,000 tonnes against the average of 500,000-600,000 tonnes.

“But this has picked up in the last two days to 400,000-450,000 tonnes and we are hopeful the revised procurement target of 7-8 million tonnes will be easily achieved,” the official commented.

Till Monday, the Madhya Pradesh government had purchased around 4 million tonnes while in the whole of 2022-23, purchases totalled just around 4.6 million tonnes.

“Over 1.5 million farmers have registered on our portal for selling wheat to government agencies. Of those around 430,000 (around 29 per cent) have sold wheat to state agencies, which means a vast majority of farmers are still to do so,” the official said.

As far as prices are concerned, as against the MSP of Rs 2,125 per quintal, the prevailing market rate in Madhya Pradesh is Rs 2,000-2,500 per quintal, depending on quality, while the same in Haryana is Rs 2,125-2,200 per quintal.

Trade and market sources said even if official procurement ended up at 25-28 million tonnes, which, when added to the opening stocks of around 8.5 million tonnes, it will mean a much higher availability than last year for smoothly running public distribution and also intervening in the market to cool prices if needed.