Normally, the Hodal market, one of the 17 mandis in Faridabad district, some 100km from New Delhi, is overflowing with grain at this time of year.
It has three extensions to cope with the rush of tractor trolleys, which weave their way through the town’s narrow alleys. But this year, all of them are just half to three-quarters full.
Bhagat Singh, an accountant with the Hodal market committee, which was established in 1952, says that last year, between 1 and 10 April, the total arrivals were 12,921 tonnes. This year, because of extensive crop damage in Faridabad district, they are down to just 3,525 tonnes, about 27% of the year-ago period.
Some 10 days into the wheat harvest, this is bad news for a government, which is battling to replenish its depleted food stocks and contain inflation. Food price inflation continues to be a matter of concern though it has moderated from the level of 12% in January to 6.1% by end-March.
According to estimates, wheat production is pegged at 73.7 million tonnes, up from 69.35 mt last year. Food Corporation of India (FCI) has set a target of procuring 15mt of wheat this season. Last year, with private trade buying directly from farmers, the government procured only 9.2mt.
An anxious government announced a Rs100 bonus to the minimum support price (MSP) last month, hiking it to Rs850 per quintal—the highest in the last 10 years. But the attractive price is not deterring farmers from selling to private traders, who offer prices ranging from Rs852 to Rs900 per quintal. As on 10 April, FCI’s total procurement was 19,613 tonnes.
In Madhya Pradesh, where there was an early harvest, the government has procured a paltry 20.6 tonnes. In Uttar Pradesh, the procurement figures are marginally higher at 59.2 tonnes, while in Punjab, which tops in terms of procurement, the government has purchased 5,907 tonnes.
Companies such as ITC Ltd are aggressively buying produce from farmers in MP and Rajasthan, where taxes are low and is easy to secure railway racks to transport wheat to the south. Says S. Siva Kumar, chief executive (agri businesses), ITC: “We have bought grain for between Rs850-870, going up to Rs1,100 for sharbati (variety) wheat in MP.”
Till 10 April, Haryana’s food and supplies department and the Haryana Warehousing Corp., the two agencies that procure for the government in Hodal, had procured just 621.7 tonnes. Procurement in the entire state, the country’s second-largest supplier, is 13,626 tonnes.
Faridabad district is the worst-hit in terms of wheat production, due to damage caused by hailstorms while the crop was ripening. Estimates say around 86,000 acres of wheat in the district were severely damaged; the surviving crop, which is yet to be harvested, is stunted.
Says Jai Prakash, a commission agent: “We will get only 60% of the normal crop this year. The per-acre yield has also fallen from two to about 1.2 tonnes.” Any transaction at the mandi has to be processed through such commission agents, or aartias.
Officials also attribute the decline in crop arrivals to the farmers’ wait-and-watch policy. Says J.P. Kundu, junior technical assistant with the state’s warehousing corporation, “So far, 30% of the yield is still with the farmer, who is waiting for big private companies to enter the market.”
At this mandi, it was evident that part of the reason that government procurement has remained lacklustre is FCI’s reluctance to buy crop with high moisture content. Safari-suited government inspectors daily reject grain consignments. Says Kanwarpal Singh, one such inspector: “The grain is green and shrivelled, moisture content is too high. We will procure less.”
Squatting besides his pile of damp wheat for the past three days, Habi, 45, a farmer with a two-acre plot of land in the village of Sancholi, awaits the elusive buyer at this sprawling market. “I have not eaten for three days. The moneylender will cut my throat. It would be better to die. Where is the sarkar (government)? Please find me a buyer,” he implores.
Nearby, Govind Ram, 80, a half-bent farmer with eight acres in Vanchari, also awaits a buyer. At 4pm, his three tonnes of wheat are picked up by a trader for Rs851; on 9 April, wheat here sold for Rs860. “Last year, I sold my wheat for Rs900 in the village itself,” he says. “This year I paid Rs400 to transport it here, and have got so little.”
Meanwhile, agents are flourishing as they earn 2.5% commission on sales from the government as well as private traders, who buy large stocks for supply to flour mills in Delhi and Ghaziabad. After buying the discarded wheat from the farmer at Rs820 or Rs830, commission agents dry it in the sun for three days and sell it for upward of Rs850.
Just 10km away in UP’s dilapidated, cow-infested Kosi Kalan market, government procurement is zero. The reason? Small traders here were picking up grain for flour mills at Rs910 four days ago. Tax structures in UP and Haryana vary considerably. Total charges to purchasers, including market fees, are 6.5% in UP, which is yet to introduce VAT (value-added tax) compared with 10.5% in Haryana. Lured by the high prices, over the past 10 days, Haryana farmers were flocking to Kosi Kalan.
Not without reason, food ministry officials in New Delhi are conducting daily meetings to assess the situation. Government inspectors in Haryana have urged the state to announce an extra bonus of Rs20-30 per quintal to induce farmers to sell to them. The rumour has begun circulating widely, with illiterate farmers inclined to believe it. Others dismiss it as a hoax. “Even if we get Re1 more, we will sell it to the highest bidder.”
The government is also keeping a close eye on market operations, including surprise visits by flying squads from Chandigarh. Officials say there is a nexus between committee members and private traders. Bhup Singh, district marketing enforcement officer and member of the flying squad that visited Hodal on Tuesday, said, “We want them to motivate farmers to sell to the government.”
Government officials are keeping their fingers crossed. Says an optimistic T. Haque, chairman of the Commission for Agricultural Costs and Prices, “The harvest is late in Punjab where there is a bumper crop this year. After 15 April, as supplies increase, the market price will reach the same level as the MSP. The FCI will be able to procure enough.”