)
All this while, the government has attributed a lower estimate for procurement of wheat in the 2013-14 crop marketing year (April to March) to a rise in buying by private traders. However, experts have started doubting the official explanation. The reason for low procurement, they say, is an expected fall in production in the 2012-13 crop year (July-June), by three-four per cent less than the last official estimate of the government.
India’s annual wheat procurement target for 2013-14 (April-March) has been twice revised, initially from 44 million tonnes to 40 mt and thereafter to 33-35 mt.
Official reasoning was that brisk buying by private traders to build inventories had resulted in a cut in procurement. This might be true to some extent. However, experts said private purchases cannot go up as much to force the government to lower its annual procurement target by as much as 25 per cent.
“Usually, of the 70 per cent annual marketable surplus of wheat, the organised private sector purchases 12-14 mt. This year, they are expected to increase it to 15-18 mt. Making heavy purchases is unprofitable due to softening of the international price of Black Sea wheat, direct competitor of the Indian variety, from over $300 a tonne to just $275 a tonne in the past few weeks,” said an official from a leading multinational grain trading firm.
He agrees flour millers and wheat-based factories had stepped up purchases but said these were too small to make a big difference. So, where has the wheat gone? In the third advanced estimate of foodgrain production, issued by the department of agriculture on May 5, India is expected to produce 93.6 mt of wheat in the 2012-13 crop year. Even at that time, it was 1.3 per cent less than the 94.9 mt in the previous year.
According to leading traders, experts and economists, wheat production in the 2012-13 crop year is not expected to be near this latest estimate of 93.6 mt. It is likely to be around 90 mt or maybe even lower, as March’s sudden rise in temperature in Punjab and Haryana and February’s unseasonal rain in Madhya Pradesh pulled down the output.
“I would expect that at the current MSP (minimum support price) and underlying yield growth of 1-1.5 per cent, the weather effect would pull down India's wheat production by two to three per cent as compared to last year,” Planning Commission member Abhijit Sen told Business Standard.
Sharekhan Commodities, in a recent research note, said the United States’ department of agriculture (USDA) had lowered India’s wheat production figure to 92 mt, while Agriwatch, a domestic agriculture information company, has reportedly pegged it around 88 mt.
However, Sen said though the output might not be as high as 93.6 mt, it wouldn’t drop to 86-87 mt.
Multinational wheat trading companies operating in India have already revised their production numbers for the 2012-13 crop year to 86-87 mt, seven to eight mt less than the previous official estimate.
“In the Indore and Hoshangabad divisions of MP alone, the wheat harvest is expected to be 30 per cent less than last year,” said a senior official who toured those areas recently. He pegged total production in the 2012-13 crop year at 89-90 mt. MP was primarily responsible for pushing up India’s annual wheat procurement in the 2012-13 crop marketing year to a record 38 mt.
The other reason, the official said, was drought in Maharashtra. Crop from neighbouring states such as MP is getting diverted, leading to lower procurementthere by state agencies and Food Corporation of India (FCI). Till May 10, around 7.2 mt of wheat had arrived in MP’s mandis, of which state agencies had procured around 5.6 mt.
Overall, over the same period, around 26.5 mt of wheat had arrived in markets across the country, of which 23.5 mt had been purchased. Last year, during the same period, 28-30 mt had arrived in the market.
