Traders worried over govt stand on wheat

Having burnt their fingers in wheat purchase last year, speculative elements in the private trade are keeping themselves away from wheat market this procurement season. This is aiding wheat procurement plans of the government.

"We are apprehensive about the actions that the government could resort to in a bid to check the rising wheat prices as an anti-inflationary measure," said an official with a large grain trading house.

Food Corporation of India (FCI), the government's grain procurement and distribution agency, has so far purchased 333,208 tonnes of wheat, which is 50.94 per cent of the total mandi arrivals. The corresponding procurement last year was 196,137 tonnes or 23.60 per cent of the total arrivals.

"Wheat prices round the year have remained stable at Rs 1,120-1,130 a quintal. Those who purchased wheat last year expecting big profits, actually lost Rs 30-40 per quintal since the price rise was not in tune with their anticipation.

Such speculative element will be minimum this time," Veena Sharma, joint secretary, Roller Flour Millers Federation of India, said last month. 
  

PROCUREMENT SO FAR  (in tonnes)
State	Arrival	Procurement
Madhya Pradesh	385,343	216,461
Gujarat	79,618	22,567
Uttar Pradesh	72,000	20,414
Rajasthan	61,859	21,912
Haryana	49,402	48,472
Punjab	4,226	2,716

FCI's procurement has seen a sharp jump in Madhya Pradesh (MP) and Gujarat. In MP, for instance, the total purchase so far is 216,461 tonnes as against last year's corresponding figure of 206 tonnes. This is significantly higher than last year's total purchase of 57,000 tonnes.

"The trend of increased procurement in both MP and Gujarat shows that the private sector is not getting into bulk wheat purchase in the hope of making profits. Our conservative assessment is that procurement should cross 15 million tonnes," said FCI Chairman and MD Alok Sinha. With a procurement of 15 million tonnes, the government may not require to import wheat.

The jump in the government's wheat purchase in MP and Gujarat is likely to set the trend for improved procurement in Punjab and Haryana, the two major wheat producing states where arrival is likely to pick up after the Baisakhi festival (April 13).

FCI had a buffer stock of 5.8 million tonnes on April 1, 45 per cent higher than the buffer norm of 4 million tonnes. This would also boost the corporation's purchase. The increase in the purchase price from Rs 850 to Rs 1,000 a quintal is also aiding procurement.

The government's wheat procurement of 11.13 million tonnes in the 2007-08 marketing season, though higher than the previous year, was substantially lower than the 14.79 million tonnes purchased in 2005-06. Consequently, import of 1.8 million tonnes was contracted at high prices, leading to criticism by farmers associations and political parties.