UP flour millers see comfortable wheat stock situation

Amid remunerative prevailing market price of wheat in Uttar Pradesh vis-à-vis the Minimum Support Price (MSP), the state flour millers are confident of getting ample supply of wheat in the state this season.

When the market prices rule low compared to MSP, the farmers prefer selling to the Food Corporation of India (FCI) and state procurement agencies. This normally creates scarcity of wheat in the open market, following which the millers either buy from other states or request the FCI to release the food grain in the open market.

In UP, the current wheat market price is above Rs 1,130/quintal compared to the MSP of Rs 1,100/quintal.

“There is ample availability of wheat in the open market. However, the complete picture would be clear only during October-November, when the lean season sets in,” UP Roller Flour Millers Association secretary, V V Chauhan told Business Standard.

There are about 250 roller flour mills in UP with the combined grinding capacity of 5 million tonnes (MT). However, they only operate at about 60 per cent capacity, he informed.

Meanwhile, the government procurement in UP has still not breached the 1.7 MT, since farmers have lucrative open market alterative.

The wheat market price shot past the MSP after UP removed the stock limit on bulk purchasers after the Centre wrote a letter to the state government. Bulk purchasers, include ITC and Cargill.

This season, UP had targeted to procure 4 MT between April and June, which included the FCI target of 1,00,000 tonnes.

There are several factors leading to low procurement, including high temperature during harvest, which affected production and resulted in shrivelling of wheat, and higher prices in the open market.

The government agencies have been deducting some amount about from the MSP on account of shrivelled wheat, which has also kept the farmers away.

Earlier, the state had estimated the wheat production would exceed 29 MT, however, the revised estimates are 26 MT, food and civil supplies department special secretary D K Gupta said.

He said almost 20 MT would be retained by farmers for personal consumption and rest is available for procurement.