The Hindu Business Line : Wheat buffer stocks: States’ contribution a source of worry

Chennai, Feb. 15 During 2006 and 2007, nearly 75 lakh tonnes of wheat were imported by the Centre to augment the buffer stocks, which are used to meet the needs of the public distribution system and overcome any food emergency. The imports were made despite production rising from 68.6 million tonnes (mt) during 2004-05 crop year (July-June) to 74.89 mt last year.

Statistics with the Food Corporation of India (FCI), the agency which procures and stores foodgrains for the public distribution system, show that but for Punjab and Haryana, the procurement plans could have gone awry in the last few years.

Private mop up

Analysts say the problem lies in procurement from the market, where during the last two years, the private trade has been able to mop up stocks offering higher than minimum support prices to the farmers.

Speaking at the international seminar on wheat and wheat products in Bangalore last week, the FCI Chairman and Managing Director, Mr Alok Sinha, said Punjab and Haryana were contributing over 90 per cent of the total procurement by the Centre.

For example, during 2006-07, these two northern States, which make up 85 per cent of the country’s wheat production, contributed 91.80 lakh tonnes (lt) of the total 92.31 lt procured by FCI. This season, their contribution is 101.03 lt of the total procurement of 111.04 lt. (See Table).

Paltry contribution

“Contribution from other States has been paltry or next to nothing,” said Mr Sinha.

However, even in Punjab and Haryana, the willingness of farmers to sell to the official procurement agencies is a worrisome factor. Punjab, for example, had contributed 98.63 lt during 2002-03. This has progressively declined and this season, it is down to 67.56 lt against 69.51 lt last year. During this period, Haryana’s contribution has declined from 58.88 lt to 33.46 lt, though last year, it was even lower at 22.29 lt.

This year, farmers in Punjab were particular about holding back their stocks, hoping for improvement in prices.

The contribution of Uttar Padesh, Madhya Pradesh, Bihar and Uttarakhand is also a cause for concern. Uttar Pradesh, which makes up 10 per cent of the country’s wheat production, had contributed 21.11 lt during 2002-03 but last year, it was a meagre 49,000 tonnes.

various initiatives

Thanks to various initiatives, this year it increased to 5.49 lt. During the last two years, growers in Uttar Pradesh have been holding back stocks.

Rajasthan contributed a meagre 2,000 tonnes last year and this year, it was up at 3.84 lt against 4.61 lt during 2002-03.

Bihar’s contribution has been negligible, while Madhya Pradesh, which makes up two per cent of the wheat production, has seen its share in the Central procurement fluctuate from 4.25 lt in 2003-03 to 4.84 in 2005-06 to nil in 2006-07 and 57,000 tonnes this year.

In fact, Madhya Pradesh was the first State this year where farmers refused to sell wheat to the procurement agencies. Gujarat, where wheat production has nearly doubled since 2004-05, is another State where there has been no contribution to the Central pool.

Total procurement down

Statistics from FCI also show that total procurement for the public distribution system against production has declined from 30 per cent during 2001-02 to 15 per cent this year.

Another interesting aspect of the data is that as the Centre increased minimum support price from Rs 620 a tonne in 2002 to Rs 750 plus Rs 100 bonus in 2007, procurement dropped. This is also an indication of the behaviour of rising prices in the open market.

Meanwhile, FCI sees the supply matching demand this year but from next year, there could be short supply, which could rise to 2.22 mt by 2001-12.