India’s wheat procurement has picked up after a government ploy to import the grain forced farmers to offload their stockpiles, traders and analysts said, lowering the need for big imports this year.
Encouraged by the jump in inflows to state bins—to 90,325 tonnes a day last week from 20,000 tonnes a month earlier, before the tender was floated—the government has extended the procurement to end-June from the usual close of May.
“It is something unheard of. For the first time in many years, procurement started all over again after it had come to a standstill,” said Kuldip Rai Thapar, secretary of the market committee at Khanna wholesale market.
Khanna, one of Asia’s biggest wholesale grain markets in the northern state of Punjab, is teeming with farmers offering wheat, a rare sight at this time of the year when procurement normally gets over.
The government floated the import tender to buy one million tonnes of wheat on 30 April, after the procurement got off to a sluggish start as farmers sat on their produce expecting prices to go up.
Last week, it called off the tender saying the prices quoted in the bids were very high. By then, farmers were only too willing to dump their stocks at a government fixed price of Rs850 ($21) per 100kg—the same as in the physical market.
On Monday, Union agriculture minister Sharad Pawar said India would not float wheat import tenders immediately.
“The government may import only a limited quantity,” Shardul Sharma, an analyst with Sharekhan, a Mumbai-based brokerage, said. “Estimates of higher output in 2007 and better procurement will obviate the need to import huge quantities.”
The government has so far stockpiled more than 10 million tonnes (mt) from this year’s harvest, and expects to top 11mt against a target of 15mt.
India needs 12mt of wheat annually to feed its poor, for government welfare programmes and to keep a lid on prices.
The buffer at the start of April was 5mt , about one million tonnes more than the norm at that time of the year.
India is expected to produce 73.7mt of wheat this year, up from 69.3mt last year when the country was forced to import 5.5mt. Reuters