The deficit in wheat procurement — 222 lakh tonne against the expected 292 lakh tonne at the national level in the rabi season this year — is showing its effects in Punjab, also known as the country granary.
To conserve its stocks, the Food Corporation of India (FCI) has reduced the share of wheat sale in the open market, leading to a demand-supply gap and rise in the wheat flour price by Rs 4 per kg in some parts of Punjab.
The auction of wheat by the FCI through national commodities and derivatives exchange market, scheduled for Wednesday, is expected to witness rise in price by around Rs 400 per quintal — from Rs 1,460 to 1,950 — and if trend continues, it may rise up to Rs 2,100, as the allotment of the quota to the FCI for release of wheat in the open market has shrunk.
Sources in FCI said verbal instructions for curtailing the sale of wheat in the open market sales service quota came from the ministry of consumer affairs, food and public distribution. “FCI’s Punjab region weekly quota of wheat sale has been curtailed to 14,000 tonnes. If there are more bidders and less stocks, prices will go up,” said Naresh Ghai, president of the Wheat Flour Millers’ Association, a body of 80-odd mills that processes about 9 lakh tonnes annually. This doesn’t include the wheat processed by local flour mills in the towns and cities of state. In Punjab, most mills are located in Khanna, Ludhiana and Jalandhar belts.
In the past few weeks, the FCI put 60,000 tonnes of wheat for sale under the open market sale, which was reduced to 27,000 tonnes last week. There was no quota earlier and traders used to purchase as much wheat they wanted.
Millers say they purchase wheat directly from the farmers during procurement in April-May. “Most millers can’t afford to stock wheat for the entire year. The stocks purchased in April lasts for four-five months and after that we depend on the FCI’s release of wheat in the open auction,” said Ghai.
However, the Punjab food and civil supplies directorate is monitoring the trend and according to a senior official there is no visible increase in the wheat flour prices. “In case of wheat scarcity, the prices are expected to jump,” he said.
But at this stage, the state food and civil supplies directorate cannot do much as it doesn’t have independent wheat stock. “We can’t pump wheat into the market because our procurement agencies purchase grains on FCI’s behalf,” said a state food and supplies official.
Confirming that the quota for the sale of wheat this week is 14,000 tonnes, FCI general manager Kumar Rahul said the corporation was keeping a watch on the situation and would ensure that the wheat price don’t rise and demand is met.
Sources in FCI revealed that the nation’s wheat buffer inventory as on October 1 was just on a par with the benchmark of 205 lakh tonnes. “In case traders’ requirement rises, the stocks are expected to drop from the buffer inventory benchmark, leading to a worrisome situation,” said an official.