Wheat purchase by private trade gets a boost in Punjab

By Sandip Das

With depletion of stocks, the private purchase of wheat in Punjab, the biggest contributor to the centres’ procurement of grain, is expected to get a boost the current marketing season.

According to Vikas Garg, secretary, food and supplies, food companies, which used to buy smaller quantities earlier, could buy close to one million tonne (MT) of wheat in the state in the current marketing season (April-June).

“We anticipate purchases by private traders going to be in the range of 0.8 MT – 1 MT this season against only 0.45 MT purchased in the previous year,” Garg told FE.

In 2022-23 rabi marketing season (April-June), private traders procured 0.6 MT of wheat from farmers while the government agencies had lifted 9.64 MT in Punjab, which contributes highest to the central pool stock.

Usually private trade used to shun Punjab for the wheat purchase because of the higher taxation regime of 8.5% imposed for wheat procurement. This includes 3% market fee, 3% rural development cess and 2.5% arthia’s commission while most of the other key states impose procurement levies of around 3%.

Naresh Ghai, president of Punjab Flour Mills Association, said that processors who are still watching the government policy on stocking will soon make a decision to purchase from the mandis.

Out of 16 MT of projected wheat output in Punjab in current crop year (2023-24), the government agencies including Food Corporation of India (FCI) and stated government bodies are aiming to purchase 13 MT of wheat in 2024-25 rabi marketing season , to bolster the central pool stocks which had dipped close to buffer of 7.4 MT at the beginning of the month.

Trade sources said traders are aiming to buy substantial quantities of wheat in Uttar Pradesh for building stock as the government purchase in the states has been limited in the state.

Meanwhile, the government wheat procurement drive by the FCI and state agencies for the current marketing season has crossed 1.44 MT since purchase under the minimum support price (MSP) officially commenced on April 1.

A chunk of wheat procurement is reported from Madhya Pradesh at 1.29 MT while grain purchase from farmers in Punjab, Haryana, Rajasthan and Uttar Pradesh have commenced.

During the corresponding period in the previous marketing season, 1.26 MT wheat was purchased from farmers.

“We are aiming to purchase more than 30 MT of wheat in the current season from the farmers,” Ashok Meena, Chairman and Managing Director, FCI said. In the 2023-24 marketing season, the government agencies purchased 26 MT of wheat under MSP operations.

Currently, the FCI has a wheat stock of 7.9 MT, against a buffer of 7.46 MT for April 1. Wheat stocks in the central pool fell to a 16-year low of 7.73 MT on April 1 due to low procurement for the last two years, and aggressive sale of grains in the open market by FCI this fiscal.

FCI annually requires around 18 MT of wheat annually for distribution of grain under the free ration scheme – Pradhan Mantri Garib Kalyana Anna Yojana. “We need sufficient stock to carry out open market sale of grain to the bulk buyers next year,” an official said.

This article has been republished from The Financial Express.