Wheat production down, procurement less; prices of flour, bread, biscuits soar

Experts urge the government to be cautious on wheat export, suggest an upper cap, say traders dictating markets

Wheat production down, procurement less; prices of flour, bread, biscuits soar

Photo for representation only. File photo

Tribune News Service

Vibha Sharma

New Delhi, May 11

Wheat production in the country is down due to “early summers”, the government’s procurement has reduced and the prices of ‘atta’ and byproducts like bread, rusks and biscuits are rising by the day. While the government is calling increasing exports as “beneficial” for farmers, experts are advocating “caution”, including imposing an upper limit on exports.

A country like India needs surplus stocks, they say, adding that private traders “cannot be allowed to dictate the market”.

“What is worrying is that while domestic prices are increasing, the government has no mechanism to cool them off. The production has reduced and there will be no purchase before next season. All this should have been considered before allowing exports,” says agriculture expert and former member of the UP Planning Commission Sudhir Panwar.

Suggesting an upper cap on exports, food and agricultural policy expert Devinder Sharma says while wheat prices registered an increase of just nine percent in the past four years, the prices of ‘atta’ went up by 42 per cent and beyond.

“There should be an upper cap of say 12 MT on exports. We have to be doubly watchful as there is no stock available in the international market. India should not land in a situation where our reserves are exhausted and we have to go around with a begging bowl,” cautions Sharma.

With the Russia-Ukraine conflict disrupting global trade, India is eyeing an increase in exports to an all-time high of 21 MT in the 2022-23 FY. It registered an export of “record 1.4 MT” in April, according to reports.

While senior officials say private trade and exports are beneficial to farmers as they are getting more than the MSP, Sharma cites the example of 2005-06 when the government allowed private traders to buy from farmers.

“Traders mopped up so much that there was a shortfall in domestic PDS and India had to import 7.1 MT in the next two years at prices more than double of what we paid to farmers. The BJP had then demanded a CBI enquiry.

“The government is encouraging exports due to pressure of the trade community. The prices will increase in the coming days because of trading and speculation. Traders have already bought from farmers, therefore, any further monetary benefit will be of traders,” he said.

Panwar added: “Barely one month after the harvesting season market sentiments are towards the higher side. The FCI wheat stocks, which are generally used for distribution in welfare schemes and regulation of market price, are lower than last year. There is apprehension that corporates, which made offensive wheat purchases, will rule the prices this year.”

While the all-India monthly average retail price of ‘atta’ was recorded from Rs 32-33 per kg in April, in some places the essential commodity was also sold at a whopping Rs 37-38 a kg.

Last week, Food Secretary Sudhanshu Pandey told mediapersons that due to an increase in market prices, higher demand by private players for domestic and export purposes and expected fall of 5.7 per cent in the output, the Centre's wheat procurement is expected to decline by more than half to 19.5 MT in the current RMS.

Earlier, the government had fixed a wheat procurement target at 44.4 MT for 2022-23 as against an all-time high of 43.34 MT in the previous marketing year. The estimate for production was revised downwards to 105 MT in the 2021-22 crop year from the earlier projection of 111.32 MT.

Ruling out any concern over meeting the domestic demand for PDS or the possibility of imposing any curbs on exports, Pandey said the purchase by the FCI is less because of increase in market prices and higher demand by private players both for domestic as well as export purposes.

“Due to higher market prices, large quantities of wheat are being bought by traders at a higher rate than MSP, which was good for the farmers. In MP, UP, Rajasthan, Gujarat, farmers are selling to traders/exporters at prices (21-24 Rs/kg), more than MSP (20.15 Rs/kg),” he said.

The government does not see the situation as a case for control on wheat exports, rather it is facilitating traders.

“Export markets like Egypt, Turkey and some European Union countries are opening for Indian wheat. Agri-export promotion body APEDA is facilitating the shipments,” Pandey said.

The government says wheat procurement has reduced but the availability and procurement of rice is sufficient to meet the demand under the National Food Security Act.

“After meeting the requirement of welfare schemes, on April 1, 2023, India would have stocks of 80 LMT of wheat, well above the minimum requirement of 75 LMT,” he said.

The procurement has touched 17.5 MT so far, a figure that may touch 19.5 MT in the 2022-23 marketing year.

#Agriculture #inflation #MSP #wheat procurement

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