Posted on May, 23, 2022 at 09:52 am
The story so far: On May 4, the government lowered its wheat production estimates by 5.7% to 105 million tonnes (MT) from the projected 111.32 MT for the crop year ending June. The production is expected to fall on account of unusually warm weather conditions that persisted during March to April in most parts of the key grain-producing States of Punjab, Haryana, Madhya Pradesh as well as Uttar Pradesh. Till May 4, wheat procurement in the ongoing winter (rabi) marketing season too had seen a drop, with the Centre procuring 17.5 MT of wheat, which is likely to touch 19.5 MT when the season ends. In the last marketing year, the government had purchased 43.3 MT of wheat from farmers, and this year it had set a target of 44.4 MT. The announcement came around the same time as a report by the World Food Programme, which said the “unfolding war in Ukraine” was likely to “exacerbate the already severe 2022 acute food insecurity forecasts” in countries.
India is the second-largest producer of wheat in the world, with China being the top producer and Russia the third-largest — Ukraine is the world’s eighth-largest producer of wheat. After five straight years of a bumper wheat output, India has had to revise downwards its estimated production. Unprecedented heatwaves across the north, west and central parts of the country, and March and April being the hottest in over 100 years, have caused substantial loss to the yield at 6%, with 20% of the wheat grain shrivelling up.
Some estimates have pegged the shrivelling as high as 80% of the crop purchased by the government. For instance, according to crop cutting experiments, conducted by the Punjab Agriculture Department every year, the State’s yield per hectare could have fallen 5-10% compared to last year’s yield.
Food Secretary Sudhanshu Pandey attributed the lower estimates to “early summer” affecting the crop yields in States, especially Punjab, Haryana and Uttar Pradesh.
This year the government’s wheat purchase has seen a dip owing to several reasons from lower yield to higher market prices being offered by private traders. A large quantity of wheat was being bought by traders at a higher rate than the minimum support price (MSP). Private traders have been prompted to buy more wheat from farmers as the price of wheat at the international level has shot up and is expected to rise due to the ongoing conflict between Russia and Ukraine. In Madhya Pradesh, Uttar Pradesh, Rajasthan and Gujarat, farmers are selling to traders-exporters at prices (₹21-24 per kg), which is better than the MSP (rate of ₹20.15 per kg).
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Also, farmers are holding on to some quantity of wheat, expecting higher prices for their produce in the near future. Mr. Pandey admitted that the substantially low procurement was due to market prices of wheat being higher than the MSP being offered by the government. He gave two other reasons for the low procurement: stocks being held by farmers and traders in anticipation of further price rises, and lower production.
Wheat procurement is undertaken by the state-owned Food Corporation of India (FCI) and other agencies at MSP to meet the requirements under the Public Distribution System (PDS) and other welfare schemes such as the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) introduced during the pandemic.
The government has revised the grain allocation under PMGKAY for May to September 2022. According to the new guidelines, the FCI will fill the gap left by wheat with an increased allocation of rice. An additional 5.5 MT rice is being allocated to the States to fill the gap in supplying wheat grain. Mr. Pandey said rice procurement last year was about 60 MT and this year a similar quantity is expected. Under the National Food Security Act (NFSA), he said the annual requirement is roughly about 35 MT. Pointing out that from next year, fortified rice will be distributed to the entire Public Distribution System (PDS), he said with surplus rice stocks, the country is in a comfortable situation.
As government wheat procurement has dipped, concerns are being raised about the stability of prices in the country and the availability of grain for internal consumption, which many agri-experts argue should be a priority.
Source: The Hindu