The government has set a target to procure a record 44 mt wheat in the forthcoming rabi marketing season (2022-23) starting April 1.

As the wheat procurement season is set to start in Punjab, Haryana, Madhya Pradesh and Rajasthan in a few weeks, the Food Corporation of India (FCI) is saddled with grain stocks of 23.4 million tonne (mt), much higher than the buffer norm of 7.46 mt. Though there are fears this could undermine purchases from farmers at the minimum support price (MSP), chances of higher exports in the wake of the Russia-Ukraine crisis could ensure steady income for farmers, trade sources said.

Supply of grains for the Public Distribution System (PDS) under the National Food Security Act (NFSA) won’t be impacted either as the stocks with the FCI are high. The corporation has disposed of around 6.7 mt of wheat through open market sale schemes to bulk buyers this fiscal.

The government has set a target to procure a record 44 mt wheat in the forthcoming rabi marketing season (2022-23) starting April 1.

India’s already exported 6.6 mt wheat between the April-February period of current fiscal, against about 2 mt of exports in 2020-21. Mandi price of wheat in Madhya Pradesh, where harvesting activities are at its peak, is ruling around Rs 2,300 per quintal against the MSP of Rs 2,015 per quintal for the session. Madhya Pradesh was to contribute about 13 mt of wheat to the central procurement drive, some of which may go for export as the farmers prefer to sell their produce to those who offer prices above MSP.

Sources told FE that there may be a drop of 15% to 20% in the procurement of wheat mostly from Madhya Pradesh from where export possibilities are greater because of its proximity to ports. In the case of Punjab and Haryana, FCI and state government agencies purchase a major volume of wheat from the farmers. Besides because of higher mandi taxes prevailing in Haryana and Punjab also discourages private trade purchase.

“Despite the anticipated drop in procurement, we will be purchasing sufficient quantities of wheat from farmers for meeting PDS and buffer stock requirements,” an official told FE. The official said that higher stock of wheat gives a cushion to the government against possible spike in prices.

Sources said that the government is unlikely to extend special provisioning of free fodograins equivalent to NFSA entitlement under Pradhan Mantri Garib Kalyan Anna Yojana beyond March 31 2022.

Commencing from April 1, the state wise procurement target of wheat includes Punjab (13.2 mt), Madhya Pradesh (12.9 mt), Haryana (8.5 mt), Uttar Pradesh (6 mt) and Bihar (1 mt).

More than 800 million people get highly subsidized five-kilogramme foodgrains per head per month under NFSA
The economic cost of food grains procurement by FCI which include expenses such as MSP payment to farmers, procurement, acquisition and distribution costs etc for rice and wheat are Rs 3,597.17 and Rs 2,499.69 per quintal respectively in 2021-22, while the government distributes rice and wheat to beneficiaries under NFSA as Rs 3 and Rs 2 per kg respectively.

The Union Budget (2022-23) has made a provision Rs 2.06 lakh crore under food subsidy in 2022-23.

According to the second advance estimates of foodgrain production by the Ministry of Agriculture had estimated India’s wheat production at 111.32 mt.

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