Wheat buys from Punjab to be hit by low output estimates

Wheat procurement from Punjab is expected to be lower this season following reduced estimates for the crop.

With untimely rain causing widespread damage to the crop this Rabi season, Punjab has lowered its wheat output estimates by 500,000 tonnes to 15 million tonnes. The state had earlier estimated that wheat production would touch 15.5 million tonnes this Rabi as against last year’s output of 15.7 million tonnes.

Due to the reduction in the crop estimates, the total crop procurement in the season is expected to be lower at 10 million tonnes as against last year’s 10.61 million tonnes.

In spite of this, the arrival of wheat in the mandis of Punjab has picked up significantly in the last couple of days as compared to the corresponding period last year. As on April 14, the state’s mandis have received 2.89 million tonnes of wheat, nearly six times more than that in the corresponding period last year. Of the total, a whopping 2.573 million tonnes has already been purchased by the state procurement agencies and private traders.

Officials claimed that the state witnessed record arrivals of wheat in mandis following early harvesting and panic due to weather. As per data, 2.89 million tonnes of wheat have arrived in the mandis as on April 14, as against 498,000 tonnes in the corresponding period last year. Up to April 14, government agencies have procured 257,000 tonnes while private traders have managed to procure only 3,000 tonnes.

A similar trend was seen last year too (up to April 14), with private traders managing to procure 6,000 tonnes while government agencies procured 395,000 tonnes in the corresponding period.

Due to the high minimum support price (MSP) of wheat and high taxes in the state, private purchases have gone down drastically. The buyers have to pay 11.5 per cent (2 per cent rural development fund, 2 per cent market fee, 2.5 per cent kaccha arhitya, 4 per cent VAT, 1 per cent infrastructure development cess) in taxes while it is 10.5 per cent in Haryana, followed by Uttar Pradesh 8 per cent. In Rajasthan, it is 7.5 per cent. As a result, private traders are procuring wheat from other states.

It is expected that arrivals of wheat will gain momentum in the coming days. Sources disclosed that the government has made proper arrangements for lifting the crop, but they are likely to face problems due to the shortage of storage space.

To get over the problem of storage space, the Punjab government has decided to lift wheat from all grain markets in the state and send it to the central pool. The wheat procured will be lifted from mandis and loaded into special trains.