FCI procurement of rice, wheat touches 50 MT

At a time when the country is reeling under high inflationary pressures, government’s grain procurement and distribution agency Food Corporation of India (FCI) has managed to create history with a record purchase of nearly 50 million tonnes (MT) of wheat and rice.

The purchase is crucial as the government is heading for polls next year.

A surplus grain stock would mean stable prices in the open market and allow the government to intervene if prices rise. Moreover, the government can allocate additional quantities to the weaker sections under public distribution schemes.

Wheat and rice have a combined weight of 3.83 per cent in the wholesale price index, which has been ruling above the 12-per-cent mark for the last few weeks.

Recently, the union Cabinet approved the open market sale of wheat to cool prices. A decision has been taken to sell one million tonnes of wheat to state governments at subsidised rates.

The 38 per cent surge in grain procurement over the last year to 50 million tonnes has been mainly due to a sharp rise in wheat purchase. However, even rice procurement is close to an all-time high.

Alok Sinha, chairman and managing director of FCI, believes rice purchase will touch an all-time high of 27.7 million tonnes by September 30 (when the current marketing season ends).
 

STOCK SURPLUS Procurement in million tonnes
Year	Wheat	Rice	Total
2002	19.00	21.20	40.20
2003	15.80	15.80	31.60
2004	16.80	22.90	39.70
2005	14.79	24.50	39.29
2006	9.20	27.60	36.80
2007	11.13	25.10	36.23
2008	22.54	27.3*

49.84 *Procurement is underway

This bumper purchase indicates that private traders have largely kept away from speculative purchase of wheat and only the end-users are going to the mandis.

While being a positive for the consumers, the jump in minimum support price (MSP) has immensely benefited the farmers.

The procurement price of wheat (including bonus) has increased by about 42 per cent in last three years to Rs 1,000 a quintal while that of common grade paddy has rose nearly 22 per cent to Rs 695 a quintal. A sharp increase in their prices has brought more liquidity in the hands of these farmers.

While in case of wheat, the farmers of Punjab, Haryana, Uttar Pradesh (UP) are the main gainers, in rice the farmers of Punjab, Andhra Pradesh, UP and Chattisgarh have benefited.

The government has a storage capacity of 40 million tonnes, of which 24 million tonnes capacity is owned by FCI and the rest is under lease. As a result, there is no storage problem even with this record procurement.