UP wheat procurement slips 35% against 5.5 million tonnes target

The Uttar Pradesh government has failed to achieve its wheat procurement target of 5.5 million tonnes (MT) for the 2019 rabi marketing season.

State agencies fell short of the target by 35 per cent and could only procure about 3.6 MT of wheat till June 15, the day normal procurement season concludes. Last year, UP had over-achieved wheat procurement target of 5 MT by procuring 5.3 MT.

The state has extended the procurement window by 10 days to June 25 to facilitate more purchase and keep the open market rates competitive for the benefit of farmers. Nonetheless, procurement this season is likely to settle at 4 MT, which would be 27 per cent less than the target of 5.5 MT.

Several reasons have been cited by the food and civil supplies department for tepid procurement, including the recent Lok Sabha polls and competitive prices prevailing in the open market.

Farmers in Uttar Pradesh are also believed to be holding on to their wheat stock in anticipation that prices will go up in coming weeks.

Besides, the decision of Food Corporation of India (FCI) to sell 10 MT of wheat to bulk consumers under open market sale (OMS) scheme this fiscal is also seen as another factor contributing to subdued wheat procurement in UP.

Under OMS, FCI releases food grains in the open market to enhance supply of wheat and rice, especially during lean season to moderate open market prices or offload excess stock. FCI has huge stock of 40 MT of wheat, including old stock of 16 MT till March 2019 and more than 24 MT of new grain procured during the ongoing procurement season.

The OMS scheme has impacted procurement in UP as traders saw profit in buying directly from the farmers given that the minimum support price (MSP) of Rs 1,840 per quintal was much lower than the OMS base price of Rs 2,080 per quintal. This led to the diversion of wheat away from procurement centres, a senior food department official had told Business Standard.

Every year, the wheat procurement season commences on April 1 and continues for two and half months till June 15, 2019.

So far, 730,000 farmers have been paid Rs 6,688 crore by the state for thier produce.

Interestingly, procurement of paddy and wheat had clocked robust figures under the Yogi dispensation, which came to power in March 2017. In 2017, the state had registered wheat procurement of 3.7 MT compared to 0.8 MT in 2016, thus registering a quantum jump of 460 per cent. This figure further rose by 43 per cent to 5.3 MT in 2018.