The government’s wheat procurement this season seems to have partly made use of what is called ‘game theory’ approach in economics. Reports suggest it may have used tenders to signal import as a “ploy” to get more wheat out into the mandis for central agencies to pick up. This was coupled with official measures attempting to contain large purchases by private traders so that “market distortions” could be avoided.
Ironically, however, wheat offers to government have shot up significantly after the season was extended beyond the normal deadline of May-end. Does that mean hoarding was done mainly by farmers? Or, as many farmers and analysts seem to believe, traders got in league with farmers and paid a small premium over the official MSP to take their produce and hoard it—expecting the tight global market to push up domestic prices? Either way, we need more transparency. How about decentralizing procurement to states so buyers with local knowledge can pre-empt such confusion?