Madhya Pradesh farmers selling wheat in distress as FCI suspends purchase

Prices crashed to Rs 1,400 a quintal (fair average quality) against its MSP of Rs 1,600 a quintal

A crash in prices and distress sales of wheat by farmers is reported from Madhya Pradesh, after the Food Corporation of India ended procurement (FCI) last week.

Prices are at Rs 1,400 a quintal for average quality, against the official minimum support price of Rs 1,600 a qtl.

A senior FCI official says at the outset of the procurement season, many farmers did not register themselves with it, amid expectation that the then high price of Rs 1,800 a qtl would continue for the entire season. However, with a bumper crop, prices crashed. And, these farmers had to sell to private traders. “FCI does not purchase commodities from farmers not registered with it," said the official.

Second, he said, the state government declared that wheat sold to government agencies above 50 quintals would result in cancellation of such farmers' ration card from the Below Poverty Line category. It seems many large farmers had such a ration card; they chose to sell up to 49 quintals to FCI and the rest to private entities. The result was a surge in supply at private markets, resulting in a price crash.

Third, said the official, many large farmers have taken loans from private cooperative societies. Which, by government guidelines, would be adjusted with the amount of wheat sale. After the Uttar Pradesh government's farm loan waiver, farmers anticipated a similar move in Madhya Pradesh. And, opted to incur losses by selling wheat at a lower price.

All these are said to have resulted in FCI's procuring no more than 6.6 million tonnes for the current season in the state, about 17 per cent less than the revised target of eight mt.