Private companies may have to let government buy wheat first

By Jayashree Bhosale

As the wheat stock with the central government is likely to fall below the buffer norm as on April 1 for the first time in over a decade, the private wheat industry and trade, who have their eyes on Uttar Pradesh, currently the source of cheapest wheat in the country may have to wait before they refill their silos, till the government meets its procurement targets.

“In a recent meeting, the government has signalled that the industry should ‘not hoard’ wheat during the arrival season and allow the government to procure wheat. However, practically, millers will have to buy wheat during the harvest season to run their plants.

Trade sources said that the Multi-National Companies (MNCs) and big corporations have a tendency to stock wheat for the entire year.

Although the new crop will start arriving in the market from April first week in small quantities, the volumes are expected to increase after mid-April after the festival of Baisakhi. The state governments of Rajasthan and Madhya Pradesh have announced to pay a bonus of ₹125/quintal over the MSP of ₹2275/quintal. “Wheat will be expensive in Madhya Pradesh and Rajasthan due to the bonus, while it has always been expensive in Punjab and Haryana due to the local mandi taxes,” said a wheat processor .

Uttar Pradesh has been the most preferred origin of wheat with the wheat industry as wheat is often available the cheapest here.

“The FCI’s procurement has been traditionally low in UP, while the farmers often resort to distress sale, which can make wheat available at lower than the MSP,” said another wheat miller, who did not want to be identified.

This article has been republished from The Economic Times.