Wheat Purchases Cross 2.5 MT, Witnessed Marginal Increase in MSP

The Food Corporation of India (FCI) and state government agencies have procured over 2.54 million tonnes (MT) of wheat from farmers since the beginning of operations on April 1. The amount of purchases made until Thursday has slightly exceeded the previous year’s amount.

Official data indicates that the purchase of wheat from farmers in Madhya Pradesh alone under the minimum support price (MSP) operations has exceeded 2 MT so far. Although the harvest has been delayed due to unseasonal rains, procurement operations in Punjab, Haryana, and Uttar Pradesh have recently gained momentum.

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A food ministry official told that the harvesting of crops has picked up speed due to the warmer weather in the last week or so, and it is anticipated that wheat procurement will surpass 8 MT within the next week.

To increase the stock, which has fallen to its lowest level since 2016 at 8.4 MT as of April 1, the government is targeting the procurement of 34 MT of wheat in the current season. The food ministry has recently raised the limit for purchasing shriveled and broken grain from farmers to 18%, with a prescribed value cut, compared to the previous limit of 6%.

The ministry has authorized states to apply a value cut of 5.31/quintal against the MSP of 2,125/quintal for wheat containing 6-8% damaged grains during the current season. Additionally, the government has permitted the procurement of wheat with up to 10% affected kernels due to lustre loss from unseasonal rains in March and early April, with a marginal value cut of only `5.31/quintal for grain with 10-80% impact to be purchased by agencies from the farmers.

On March 31st, the ministry eased procurement standards by authorizing the purchase of grains with lustre losses above 10% from farmers in Madhya Pradesh, with only a marginal value cut of 5.31/quintal against the current season’s MSP of 2,125/quintal.

Due to a decline in output caused by a temperature spike in March and increased private purchases driven by global demand, the government’s wheat procurement from farmers fell by over 56.6% to 18.8 MT last year, compared to the 43.3 MT procured in 2021.

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In order to restore the stock to a sufficient level for the implementation of the National Food Security Act and the creation of an adequate buffer stock, the FCI and state agencies must purchase a minimum of 30 MT of wheat from farmers this season. By July 1st, FCI needs to maintain a buffer of 27.57 MT of wheat.

The government has expressed optimism regarding a record wheat production of 112 MT in the current crop season (July-June) and dismissed the likelihood of significant reductions in grain output due to recent unseasonal rains in key states. Furthermore, a survey conducted by the Roller Flour Millers’ Federation of India reported that the production of wheat to be around 102.89 MT in the current crop year.