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| Flour mills desert local wheat, opt for neighbours' |
| Ajay Modi / New Delhi Apr 09, 2009, 00:07 IST |
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An interesting trend of flour millers and bakeries procuring wheat from neighbouring states has been gaining ground in the country.
Millers in Punjab, Haryana are buying wheat from Uttar Pradesh (UP) while those from UP have turned to Rajasthan and Madhya Pradesh (MP). Similarly, millers in Maharashtra are buying from UP, MP and Gujarat, while those from Andhra Pradesh and Karnataka are procuring the commodity from Maharashtra.
“The auction rate of wheat at the mandi (market) is higher than the cost of landed wheat from UP. Also, buyers have to pay a 13.5 per cent tax on the auction rate. Considering the minimum auction rate of Rs 1,085 a quintal, a buyer will need to pay Rs 146 as taxes. The final cost comes to Rs 1,231 a quintal, while the cost of landed wheat from UP comes to Rs 1,085 a quintal,” said D C Singla, managing director of Arti Roller Flour Industries at Khanna in Punjab. Khanna is the Asia’s largest grain mandi.
Wheat is selling in UP, the country’s largest wheat producing state, at Rs 940-950 a quintal, much below the minimum support price (MSP) of Rs 1,080 a quintal declared by the government.
This is the second consecutive year when wheat is selling in the country at a price below the MSP. This reflects the kind of glut situation that is in the offing so far as wheat is concerned.
There was a record output of wheat last year in the country and this year’s output is estimated to be the second biggest ever. The government already has an ample wheat stock. As of March 1, the central pool had wheat stocks of 15.27 million tonnes, more than sufficient to meet the requirement of public distribution system for a year. This year, the government is expected to procure a record 25 million-tonne of wheat.
“The price would not have crashed to a level below the MSP, had the government procurement been effective,” said Pradeep Singhal, president of UP Roller Flour Millers Association.
Interestingly, the procurement of grains is decentralised in UP. The decentralised procurement scheme of the central government has been in operation since 1997.
Under this scheme, the designated states procure, store and also release grains as per allotments indicated by the central government. The difference between the cost incurred by the state government and the price at which the grains are released is passed on to the state as subsidy.
“Food Corporation of India has a limited role to play in UP. We provide assistance to the government when asked. We are not aware of any distress sale of wheat,” said an FCI official.
Singhal said the wheat harvest in UP had begun at least two weeks earlier, owing to changes in weather. “In the interim, state millers began procuring wheat from MP and Rajasthan as prices were lower by Rs 20-25 a quintal in these sates. Moreover, the quality is also better,” he said.
Ajay Goyal of Mumbai-based Shivaji Flour Mill said he was buying wheat from UP, MP and Gujarat because of the price advantage. But it is not that every miller is buying only from outside the state,” he said.
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