Financial Daily from THE HINDU group of publications
Tuesday, Mar 21, 2006
Financial Daily from THE HINDU group of publications Tuesday, Mar 21, 2006 |
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Agri-Biz & Commodities - Wheat Buying wheat for buffer stocks may prove difficult Our Bureaus
The problem for the Centre is that the Uttar Pradesh, Punjab and Haryana Governments have asked it to increase the MSP.
Chennai, New Delhi, March 20 Looks like the Union Government has a problem on hands to procure wheat for the mandatory buffer stocks. The problem could be because the farmers may not be forthcoming to sell their produce at the stipulated minimum support price (MSP) of Rs 650 a quintal. The reasons for the growers' reluctance could be that wheat prices are currently ruling above Rs 900 a quintal and may not decline to MSP levels even when arrivals peak. The trend of futures price on MCX and NCDEX also points towards such a development. On Monday, wheat dara was quoted at Rs 940-42 a quintal in New Delhi. On NCDEX, April wheat contracts ruled at Rs 802 a quintal and May at Rs 810. On MCX, April delivery was quoted at Rs 818 and May at Rs 817. "We think the Centre may have to foot a higher bill to procure wheat for the buffer stocks," said an official with a fast moving consumer goods (FMCG) firm. "At the most, it may just dip below Rs 700 during peak arrival," the official, who did not wish to be identified said. "Prices may just remain around Rs 700 a quintal level because there are many who are waiting for the arrivals to begin," said Mr Anirudh Agrawal of Agra Flour Mills.
Lower stocks
Though private buyers are initially seen buying around 10 lakh tonnes only, lower stocks with the Food Corporation of India and lower than expected crop could keep the prices above MSP, according to analysts and experts. According to an FCI official, current stocks with the corporation is around 30 lakh tonnes including consignments that have been despatched. On the other hand, the Centre has revised its initial estimates of wheat crop to 73.01 million tonnes (mt) from 75.5 mt. "Already, some private traders are offering to pay around Rs 750 a quintal to farmers in Uttar Pradesh," said a southern-based flourmill official. Mr Siraj Hussain, Executive Director, Food Corporation of India, said the corporation would be able to procure 163 lakh tonnes of wheat, the target set by the Centre for buffer stocks buying this year. Asked if FCI would have to pay higher than MSP, he said: "We have never paid higher than MSP for wheat." States seek higher MSP The problem for the Centre is that the Uttar Pradesh, Punjab and Haryana Governments have asked it to increase the MSP. Haryana and Punjab are ruled by Congress, which heads the United Progressive Alliance at the Centre. "There is pressure from the State Governments to raise the MSP," said an industry official. Also, there is resentment among a section of farmers against duty-free import of wheat and this could also cause problems for the Centre. The Union Food Secretary, Mr R.N. Das, when contacted told Business Line that "as of now, we have no plans to hike the MSP for wheat". He also expressed confidence over meeting the wheat procurement target. Food Ministry officials say though they would be paying an MSP of Rs 650 for wheat, the total price for a quintal actually would be around Rs 720 after footing various other overheads such as mandi fees. "The Centre could find a way out by either paying bonus to growers or asking FCI to silently procure at a price higher than MSP," said a trade official.
More Stories on : Agricultural Policy | Wheat
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