NEW DELHI: The government has asked states to take measures to ensure smooth procurement operations of wheat, even while it held out on raising the procurement price, which is currently Rs 750 per quintal.
Government sources said no decision on hiking the price could be taken at this stage as the Election Code of Conduct was in force till the end of the month.
A meeting of state food secretaries had been called by the ministry of agriculture to decide on the procurement strategy before the wheat harvest begins to reach the markets. Depleted food stocks and lower than expected wheat crop, has ensured that the government will have to compete with the private sector for buying wheat to shore up its stocks. The government has scaled down its projections for the rabi harvest of wheat to 72.5 million tonnes (mt).
The secretary, food and public distribution, T. Nand Kumar, told the states to take pre-emptive measures to ensure smooth procurement operations for wheat in all states, particularly in Uttar Pradesh (UP), Madhya Pradesh and Rajasthan.
Representatives from the northern states urged the government to raise the procurement price of wheat from the present minimum support price (MSP, the price guaranteed to the farmer) of Rs750. “We told them it was all a matter of demand and supply and we could not afford to be anti-farmer in the present volatile circumstances. We cannot force the farmer to sell to us at this rate,” said an official who was part of the deliberations, but did not wish to be quoted.
Underlying the sense of urgency gripping government, the food secretary revealed that teams from the Food Corporation of India (FCI), the primary agency for procurement, will shortly visit all the wheat growing states to coordinate procurement arrangements.
FCI and state agencies will earmark areas with maximum production, and open an additional number of purchase centres and ensure adequate storage facilities and strict monitoring of the operations.
Official sources said the decision on delinking the procurement price from the MSP would be taken later in the month, once the government had a clearer outlook on the crop arrivals in the market place. At present, the government announces a MSP at the beginning of the production season and then offers a bonus, if required, when the crop begins to arrive in the market.
Experts had said this cramped the procurement operations as very often the bonus was not declared in time and hence there was a need to delink the procurement price from MSP and make it reflect market conditions.
According to wheat analyst Rajni Panicker of Man Financial, “there is a consensus that the crop production will be72 mt , while domestic consumption is supposed to average 73 mt. There is a shorfall for the third consecutive year which is leading to a tightness in the market.”
She said, “currently there is buying interest at Rs880 in the futures market, which would take the spot market price to at least Rs825.”