FCI to miss wheat procurement target
1 min read . Updated: 08 May 2023, 11:18 PM IST
PremiumFood Corp India will miss the wheat procurement target of 34.5 million tonnes during the 2023-24 April-March Rabi marketing season due to stocking by private traders and farmers holding back their produce.
New Delhi: Food Corp India will miss the wheat procurement target of 34.5 million tonnes during the 2023-24 April-March Rabi marketing season due to stocking by private traders and farmers holding back their produce.
“FCI will not be able to procure its estimated set target for wheat as private traders and millers are offering more remunerative prices to purchase farmers’ produce. This will result in about 26 million tonnes wheat procurement this season," the agency’s chairman and managing director Ashok Meena said.
Farmers in some states such as Uttar Pradesh and Bihar are keener to sell their wheat crops to traders, millers and stockists due to higher market prices. This is the reason FCI’s procurement in these states has been significantly lower than in Punjab and Haryana, said Navneet Chitlangia, vice president of Roller Flour Mills Federation of India.
Fair average quality (FAQ) wheat in key wholesale markets of Uttar Pradesh and Bihar is being traded at ₹2,100-2,300 a quintal, while it is quoted at ₹2,125-2,126 per quintal in Punjab and Haryana, according to the agriculture ministry’s agmarknet portal.
FCI is procuring wheat at the minimum support price of ₹2,125 a quintal.
According to industry people, some farmers across the country are holding back their produce hoping for something like last year’s prices—they are neither selling it to the government nor to private traders. Last year, wheat prices hit a record high and continued soaring until the government in January came up with a system to release grains in the open market. “Farmers are expecting a similar trend this year, which may not be the case," Chitlangia said.
Farmers are refraining from selling only inferior-quality wheat which was not accepted for procurement as per FCI’s norms, it is learnt. “Prices are anticipated to increase, but not as much as last year. After the government procurement is over in June and arrivals start declining, and when prices go up from the current levels, farmers are expected to sell out their produce," said Sanjay Gupta, managing director and CEO of National Commodities Management Services Ltd.
“However, price scenario will be clear after two months once farmers are done sowing kharif crops." Stockists fear the government may intervene and impose a stock limit on wheat if prices shoot up as it happened in the previous year. “Traders, millers and industrial consumers are stocking up for 1.5-2 months on average for operational purposes," said Indrajit Paul, assistant general manager of DeHaat, an agritech company.
“It is good that farmers are benefitting from remunerative prices offered by private traders and millers," said additional secretary of food and public distribution department Subodh Kumar Singh.
“Our requirement for the (subsidised) public distribution system is 18.5 MT and buffer requirement is 7.5 MT. As far as procurement is concerned, till 7 May, FCI has purchased 24.6 MT wheat. More purchases are expected as the procurement drive will go on till June."
“There is nothing as such procurement target. The government fixes an estimated target for procurement taking the maximum figure into consideration, so that funds are arranged on prior hand and payment could be made to farmers at the earliest," Singh added.
“A 10% increase in wheat prices leads to almost 30bps increase in headline inflation. This is only the direct impact, the pass through by higher fodder prices and resultant increase in milk and meat prices implies a significant indirect impact on inflation as well, said Sakshi Gupta, deputy vice president of HDFC Bank. “Retail and wholesale inflation readings are expected to print lower in the coming months, and retail inflation is expected to average at 5.3% in FY24.
“Any spikes in cereal inflation amid El Nino predictions could derail the disinflationary trend and have second round impacts on inflation, weigh on rural consumption—lower discretionary spends by rural households that allocate a majority of their consumption basket on food items over 50%. This could in turn weigh on rural economy if inflation spikes are sustained. Pro-active supply side measures would be critical in reigning in any inflationary pressures in cereals," the economist said.