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Low Wheat Procurement In The Current Marketing Season

Low Wheat Procurement:

Wheat procurement by government agencies is set to dip to a 15-year low in the current marketing season, from an all-time high scale last year.

  • Likely procurement this time: The 18.5 million tonnes (mt).
  • This would be the first time that wheat procured from the new crop (18.5 mt) is less than the public stocks at the start of the marketing season (19 mt).
  • This is also a 15-year-low. This is the lowest since the 11.1 mt bought in 2007-08.

Reason:

  • Rise in export demand: Mainly fuelled by Russia – Ukraine war.
  • The war has led to skyrocketing prices and a further increase in demand for Indian grain. Farmers find it more profitable to export now.
  • Lower production: The sudden spike in temperatures from the second half of March — when the crop was in the grain-filling stage, with the kernels still accumulating starch, protein and other dry matter — has taken a toll on yields.

Impact :

  • This would affect the minimum operational stock-cum-strategic reserve of government agencies.
  • This would also affect the public distribution system, midday meals and other regular welfare schemes.
  • Farmers will certainly benefit from the scenario as they are being offered a price above the MSP. Amid the Russia-Ukraine crisis, new markets in countries like Israel, Egypt, Tanzania and Mozambique have opened up for India.
  • However, on the other hand, if private traders continue to buy above MSP, eventually that could stoke inflation.

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