Wheat prices ruling 20% below MSP in UP

The government has so far procured 20.36 million tonnes of wheat and may go on to procure 23-24 million tonnes, comfortably above last year’s record 22.5 million tonnes. However procurement in Uttar Pradesh is still going slow.

The government has bought 20.36 million tonnes wheat from farmers so far since procurement operations started on March 20, up from 16.37 million tonnes a year ago, said an official from agriculture ministry. Wheat prices in most mandis are still below their minimum support price (MSP) despite record procurement as farmers are selling wheat stock damaged due to rain. Against the MSP of Rs 1,080 a quintal of wheat announced by the union as well as the Uttar Pradesh government, the farmers are forced to sell their produce for Rs 850 a quintal in the open market and the middlemen.

The slow pace of procurement by the government agencies in Uttar Pradesh has led to such a situation where the farmers are selling wheat at a price 20 per cent less than the MSP.

The rates in the mandis of Punjab and Haryana are also not encouraging as open market price is much lower than the MSP in these states. In Punjab, only the superior quality RR 21 wheat is selling for Rs 910-950 a quintal.

The other varieties are selling for Rs 850-900 in different mandis. In the markets of western UP and Haryana adjoining Delhi, the situation is not good this time as farmers there are making distress sale of their produce for a price much below the MSP. In fact UP wheat is moving to Punjab and other near by states where millers are buying it, as wheat from UP is still cheaper compared to local buys.

For the first time in the last five years the ‘Sharbati’ variety of wheat coming from Madhya Pradesh is available for Rs 1,100 a quintal in the open market. Earlier this variety of wheat used to sell at Rs 1,500 to Rs 1,700 a quintal in the UP market.

According to the officials of mandi parishad, a large number of farmers in UP have opted for wheat in place of cane this time since they see it as the only option of making good money. “The farmers are depending on the sale of wheat for their cash need and hence they cannot hoard,” said MD Singh, former chairman Mandi Samiti.

It may be mentioned that for the second consecutive year there has been a bumper crop of wheat in Uttar Pradesh. According to the figures available with the agriculture department, the total production of wheat in UP this year has been to the tune of 26 million tonnes, which is 600,000 tonnes more than the previous year. This may rise after the final figures of production reaches the department by May 30. The UP government has set a target of procurement of 2 million tonnes of wheat this year and till date it has purchased 1 million tonnes. The wheat procurement in UP will continue till May 31.

Despite buying of almost a million tonnes of wheat by Food Corporation of India (FCI) from UP mandis, spot prices have not gone up. Sources said that some arhatiyas/ brokers are understood to have purchased wheat from farmers and are selling it to FCI where as FCI’s records show these sellers as farmers.