MP might miss wheat procurement target

Inclement weather, coupled with the aggressive entry of private traders into the wheat market, is likely to throw a spanner in the Madhya Pradesh government's record wheat procurement target of 11 million tonnes (mt) for this year. So far, the wheat procured from mandis stands at only a third of the target. For this season, the crop in the state is estimated at 16.2 mt.

Traders are running out of wheat stocks and are pre-empting buying wheat from the open market and selling it to flour mills at higher prices. Flour mills don't have substantial wheat stocks and are keeping away from the market, as prices in the open market have surged.

The Food Corporation of India aims to procure 44 mt of from various regions across the country. Of this, a quarter is expected to be procured from Madhya Pradesh.

"We have nil stocks this year. So, we are purchasing wheat at higher prices. Common varieties, such as the Lok-I cost Rs 300 a quintal more, while prices of the Sujata (sharbati) variety are Rs 500/quintal higher," said Sanjeev Jain, an office-bearer of the Bhopal Grain Merchants' Association.

Traders and sources in the government, as well as in mandis, said farmers were holding on to wheat stocks, anticipating higher prices. Mandi officials in Bhopal said this had led to a fall in arrivals to government procurement centres. "We cannot pick wheat, as this would be a costly affair for us," said Sunil Agrawal, president of the Madhya Pradesh Flour Millers' Association. Flour millers expect prices to fall after procurement, while traders and farmers believe mills would have to buy wheat at higher prices from the market.

"On an average, private traders are buying about 8,000 quintals daily, while 5,000 quintals go to government procurement centres," said a Bhopal mandi official, adding, "Since last week, traders are coming forward to offer higher prices to wheat growers."

At the mandis in Hoshangabad, Itarsi, Seoni Malwa, Harda and Barasia, where wheat is usually procured by the government on arrival, the case is similar. "Since the last few days, private traders have also picked substantial wheat," said an official at the Hoshangabad mandi.

Traders expect to procure at least 40 per cent of the wheat available with farmers, as this would fetch them better prices when demand would rise, once the government procurement season was over. "We will close this session in the Bhopal, Indore, Ujjain and Hoshangabad regions by May 18; in the rest of the regions, government procurement would end on May 25. As of now, we cannot say whether we would achieve the target of 10.9 mt. At 3.6 mt so far, the procurement is as expected," said Chandrahas Dubey, managing director of Madhya Pradesh Civil Supplies Corporation.

Wheat procurement in Madhya Pradesh began on March 18.

The state government is offering a bonus of Rs 150 bonus per quintal of procured wheat, making it lucrative for farmers (Rs 1,500 a quintal). To make wheat procurement more transparent, the state government has introduced an electronic system. This year, about 1.5 million farmers have been registered under this system. A total of Rs 1,050 crore has been earmarked for the bonus; so far, Rs 5,500 crore has been transferred to farmers' accounts, against procurement.