Government Increases Procurement of Wheat Under MSP by 13%

In the last one week, wheat procurement by state government agencies and the Food Corporation of India (FCI) has gained momentum after a slow start caused by harvesting delays due to unseasonal rains last month.

As of Thursday, the procurement of wheat by agencies from farmers under the minimum support price (MSP) scheme has exceeded 12.45 million metric tonnes (MT), marking a 13% increase from the previous year. The highest wheat contributors to this procurement are Punjab, with 4.67 MT, followed by Haryana, with 4.21 MT, and Madhya Pradesh, with 3.48 MT. However, the purchases made in Uttar Pradesh and Rajasthan have been negligible.

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Official data shows that there has been an arrival of 16.13 million metric tonnes (MT) of wheat in the significant mandis until now, as compared to 15.45 MT reported in the first three weeks of the procurement season (April-June) last year. Around 1.31 million farmers have benefited from the minimum support price (MSP) operations for wheat purchase. However, while the government agencies owe Rs 26,188 crore to farmers for their wheat purchase, they have only paid Rs 12,037 crore to date.

A representative of the food ministry has stated that the payment of minimum support price (MSP) to wheat farmers has experienced delays due to the implementation of value loss by the ministry under the more flexible procurement regulations. A few states have committed to providing compensation to the farmers for the value loss resulting from procurement agencies. The government aims to procure 34 million metric tonnes (MT) of wheat in the present season to increase the stocks, which have fallen to 8.4 MT as of April 1, representing the lowest level since 2016.

The food ministry recently granted permission to buy shrunken and damaged wheat grains from farmers in Punjab, Haryana, and Rajasthan, up to 18%, with a specified reduction in value. This represents a significant increase from the earlier limit of 6%.

The ministry had eased procurement regulations by allowing the purchase of grains with a loss of shine of over 10% from farmers in Madhya Pradesh earlier on March 31. The relaxation came with a nominal value cut of 5.31/quintal against the minimum support price (MSP) of 2,125/quintal for the current season.

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Last year, the government’s procurement of wheat reduced by over 56.6%, amounting to 18.8 MT, compared to 43.3 MT purchased from farmers in 2021. This was due to a decrease in production resulting from a surge in March temperatures and an increase in private purchases driven by global demand. In order to restore the inventory, it is essential for the FCI and state agencies to procure at least 30 MT of wheat this season from farmers. This will ensure a sufficient amount of grains for the implementation of the National Food Security Act and the creation of an appropriate buffer stock. By July 1, FCI must have a buffer of 27.57 MT.

The government has expressed optimism about achieving a record wheat production of 112 MT during the current crop season spanning from July to June. Furthermore, the government has ruled out any significant reduction in grain output due to recent unseasonal rains in important states. According to a survey report by the Roller Flour Millers’ Federation of India, the predicted wheat production for the current crop year was 102.89 MT.