The Hindu Business Line : Wheat procurement to hit 10-year low

The Government's Rs 50 per quintal bonus offer to wheat farmers has seemingly come too late. Total procurement during the ongoing 2006-07 rabi marketing season looks unlikely to cross 95 lakh tonnes (l.t), the lowest ever since the 1997-98 level of 92.98 lt.

"The decision should have come before the season's start. The late announcement has only created unrest among farmers," trade sources said. The Government had, on April 21, granted a bonus of Rs 50 per quintal, over and above the minimum support price of Rs 650 fixed for the current season. "Before the bonus, many farmers had sold wheat to private agencies at Rs 655 to Rs 680 per quintal. They now feel cheated, as only those who supplied to government agencies are eligible to get Rs 700 per quintal, inclusive of the Rs 50 bonus," the sources added.

As on May 1, the Food Corporation of India (FCI) and State agencies had procured 88.42 l.t of wheat out of the cumulative market arrivals of 118.40 l.t. During this period last year (April 1 to May 1), they had bought 133.30 l.t out of the 141.07 l.t arrivals. Thus, the Government has not only mopped up a smaller share of the wheat officially coming to the mandis, but also missed out on the crop that would have been contracted directly from the farmers' fields. Off-mandi transactions this time are estimated at nothing less than 20 l.t.

The poor timing of the bonus is apparent from the fact that by April 21 (when it was announced), total procurement had already touched 75 l.t. "Since then, they have added only about 10 l.t. With the season virtually over, procurement would just about hit 95 l.t, whereas it could have been 40-50 l.t higher had the bonus been announced 20 days earlier.

The gap would now have to be met through imports," the sources noted.

As on April 1, total wheat stocks in the central pool stood at 20 l.t.

Taking total procurement at 95 l.t and average monthly offtake at 15 l.t, stocks on July 1 would hover around 70 l.t, against a normative minimum buffer of 171 l.t for that date. That would entail an import requirement of some 100 l.t.