Govt wheat buy at all-time high

RISING PRICE INDEX: READING BETWEEN THE NUMBERS

The earlier record procurement of 20.6 mt was in 2001-02. Food Corporation of India (FCI), the government's grain procurement and distribution agency, expects the figure to touch 22 mt. This would be almost double the 11.1 mt purchased last year. Aided by a record wheat output of 76.78 mt and stable open market prices, FCI has more than doubled its last year's corresponding purchase of 9.97 mt.

"Procurement (of wheat) seems set to touch 21.5 mt and might even climb up to 22 mt. More wheat is expected to come from Uttar Pradesh, Bihar, Madhya Pradesh and Punjab," said Alok Sinha, chairman and managing director, FCI.

The largest contribution of about 9.84 mt has come from Punjab, followed by Haryana's 5.2 mt. Other major contributing states are UP (2.29 mt), MP (1.87 mt), Rajasthan (over 872,000 tonnes) and Gujarat (over 341,000 tonnes). Chidambaram said around 98.4 per cent wheat in Punjab and 99 per cent in Haryana had been procured by FCI.

He added rice procurement stood at 24.5 mt and would rise much more by September-end. "Our farmers deserve to be complemented for this performance", he said.

With this level of procurement and an opening stock of 5.8 mt on April 1, India may not need to import wheat this year for the public distribution system.

"Better grain procurement will ensure stable prices in the open market and ease the pressure on inflation. With surplus stock, the government can intervene in the open market whenever there is significant price increase", said a market expert.

Stable prices in the market over the last one year along with apprehensions of coercive government action on stockholding has kept private traders largely away from the grain mandis. This is evident from the fact that FCI, along with other agencies, has procured 92 per cent of the total mandi arrivals so far this year, as against 73 per cent during the corresponding period last year.

Even wheat prices have cooled to Rs 1,070-1,080 a quintal, down about 5 per cent since April. Perturbed over rising inflation, the government can now relax as far as wheat is concerned. The commodity has a weight of 1.38 per cent in the wholesale price index (WPI).

The government has taken a host of measures to ensure adequate wheat procurement. Apart from raising the procurement price from Rs 850 to Rs 1,000 a quintal, it has banned exports and imposed compulsory declaration for private purchases exceeding 10,000 tonnes.

The Department of Consumer Affairs has extended the validity of the notification enabling state governments to impose stock limits on wheat till August 2008.