Ukraine crisis: Farmers registering to sell wheat at MSP in MP down by 17%

Around 1.98 million farmers have applied to sell wheat to govt agencies this year, against around 2.4 million during the same period last year

The number of farmers in Madhya Pradesh registering to sell wheat to state agencies has dropped by more than 17 per cent because of the rush for the cereal on the part of private players.

This is owing to the spike in global prices because of the Russia-Ukraine crisis.

Official sources said until March 10 (which was the last date for registration), around 1.98 million farmers applied to sell wheat to government agencies, while last year during the same period it was around 2.4 million.

This has happened after a long time in Madhya Pradesh, one of the foremost of the states procuring wheat for the Central pool.

For the past few years, it has been figuring above Haryana as the largest contributor to the Central pool after Punjab.

“As a result of the drop in registrations, we might have to scale down our  procurement target from 12.8 million tonnes to around 10 million tonnes as of now, which could go down even further if prices remain at the current levels,” Deepak Saxena, director of food and civil supplies, Madhya Pradesh, told Business Standard on the phone from Bhopal.

Saxena said there were two main reasons for the sharp and unprecedented drop. One is the decision of the government to authenticate all applicants with their Aadhaar numbers, and the second, and more potent, reason is the sudden spike in mandi prices.

“We are purchasing wheat at a minimum support price of Rs 2,015 per quintal, while in several mandis of the state the average price being quoted for the past 10-15 days is much higher at around Rs 2,300-2,400 per quintal,” Saxena said.

The state government had made arrangements for storing around 14 million tonnes of wheat this year by vacating the space occupied by chana and other crops, but now it seems the extra space might not be required.

Long queues of tractors are appearing outside all major mandis where the crop is sold in Madhya Pradesh.

“Until a few weeks ago, wheat was selling at around Rs 2,000 per quintal but now suddenly the prices have shot up to Rs 2,300-2,500, which is why farmers are looking to liquidate their produce in a hurry,” a farmer in Mandsaur district of Madhya Pradesh said.

He hoped the trend would continue after Holi as well, when arrivals are expected to pick up.

Indian wheat prices in world markets shot up to around $360 per tonne (FOB) a few days ago in the aftermath of the Russia-Ukraine crisis, cooling a bit to $340-350 per tonne.

The current price of Indian wheat is still the cheapest among all global competitors. The absence of wheat from Ukraine and Russia from world markets for the next few months will give Indian traders a chance to ship record quantities this fiscal year and even in FY23.

Trade and government sources said India was expected to export a record 7-7.2 million tonnes in the current financial year. The export could reach a fresh milestone of almost 10 million tonnes in 2022-23 if global market conditions remain benign and curbs on outbound shipments are not imposed.

India is expected to harvest over 111 million tonnes of wheat, a record, in 2022-23, which is almost 2 million tonnes more than this year.