Wheat purchases sufficient for food security needs but may miss target: Data

Govt procures enough wheat for food security, but may fall short of target due to farmer stockholding. Surplus stocks help stabilize prices in case of inflation.

New Delhi The Union government has procured enough wheat to meet the country’s food security needs, including distribution of cereals to nearly 800 million beneficiaries of the National Food Security Act, but it could end up short of its target despite a bumper harvest, official figures show.

Wheat purchases sufficient for food security needs but may miss target: Data

When food inflation rises, surplus stocks allow the Centre to cool prices by selling cereals in open markets to boost supplies. Procurement refers to the government’s purchases of grains from farmers at federally determined minimum support prices (MSP).

The Centre has so far purchased 26.24 million tonne of wheat, marginally higher than last year’s 26.20 million tonne against a target of 30-31 million tonne. The winter staple is sown in November and harvested in March-April.

The government may not be able to meet its estimated procurement target because most of the winter staple is sold during April-May and procurement ends in mid-June. Traders say several farmers are holding on to their stock, hoping that prices will go up in the coming months.

In 2022-23, the government’s purchases dropped to 18.19 million tonne, after a heatwave cut yields, causing cereal prices to spiral. In 2021-22, the government procured a record 43.34 million tonne.

“Wheat procurement is going on smoothly. Our requirement for all welfare schemes, including Pradhan Mantri Garib Kalyan Yojana, is about 18.4 million tonne-18.6 million tonne. Currently, total procurement has reached more than 26 million tonne. This is a very favourable level of procurement compared to our operational requirement,” an official said, requesting anonymity.

In 2022 and 2023, heatwaves linked to climate change crimped wheat output in the country, prompting it to ban export of wheat, apart from rice and onion. If state-owned stocks are plentiful this year, it will also help to bring down wheat prices, which have been elevated, lifting overall food inflation.

The average wheat procurement by the world’s second-biggest producer in the past decade has been about 31.5 million tonne and, this year, the government estimates to procure a similar quantity.

As on April 1, the government was required to maintain 7.4 million tonne of wheat as mandatory buffer, and the actual stocks on that date were barely above that limit at 7.5 million tonne.

Nearly 2.23 million farmers have been paid a total of ₹59,715 crores in minimum support prices so far, a government statement said on Friday.

Sufficient procurement is critical this year to help India, also the world’s second biggest consumer, replenish depleted stocks, which have hit a 16-year-low. The draw-down in stocks is the result of the government dipping into its reserves to sell a record 10 million tonne of wheat in the open market over the past year to cool prices.

To be sure, while the government has procured slightly more than 26 million tonne and the threshold minimum requirement is 18.6 million tonne to fulfil obligations under all welfare scheme, it will still need to procure 3-4 million tonne to be able to comfortably intervene in markets to stabilize prices in case of high cereal inflation, past trends show.