The Hindu Business Line : FCI may top wheat procurement target

Waiting to be filled up soon: A driving institute has found an ingenious way to use the empty yards at the grains market in Moga, Punjab — training drivers of trailers as arrivals of wheat so far have been very tardy. Wheat arrivals are expected to peak from April 15 onwards. —

M.R. Subramani

Khanna (Punjab), April 12 The Food Corporation of India (FCI) is likely to meet its target of procuring 150 lakh tonnes of wheat for buffer stocks and perhaps exceed it despite talks of the crop being affected by last week’s rain and hailstorm.

Factors favouring FCI are higher costs of procurement that hinders buying by private agencies and the move to pay 2.5 per cent commission to “arthiyas” (commission agents) in Uttar Pradesh as is being done in Haryana and Punjab, according to traders.

Food Ministry officials, too, agree, saying Madhya Pradesh, Rajasthan and Bihar could also be contributing to the Centre’s pool of food stocks this year.

This year’s procurement target is against 111.04 lakh tonnes procured last year. As on April 1, wheat buffer stocks were 58 lakh tonnes against the norm of 40 lakh tonnes.

“Private trade is likely to keep off from buying wheat in Haryana and Punjab because the total procurement costs come to nearly Rs 1,190 a quintal.

Along with this, transport charges will make it uneconomical for them to buy from here,” says Mr Raj Sud, a trader in the Khanna grains market. He estimates procurement in Punjab and Haryana at 115 lakh tonnes.

While the growers have to be paid a minimum support price of Rs 1,000 a quintal, a 2.5 per cent commission will have to be paid to the “arthiyas’ along with four per cent value-added tax and four per cent market fee in Punjab and Haryana.

In addition, in Punjab a buyer will also have to foot one per cent cess imposed on VAT by the Badal Government along with a one per cent agricultural tax. Besides, Rs 30 will have to be spent for packaging each quintal of wheat in jute bags, while Rs 5-6 will have to be spent on labour. This apart, Rs 6-7 will be incurred in moving the wheat from the market to FCI warehouses.

‘Smart move’

In contrast, procurement costs only Rs 1,010 in Rajasthan and Rs 1,080 in Madhya Pradesh, while transportation charges are lower.

“Due to such high procurement costs, Haryana and Punjab could contribute totally 130 lakh tonnes,” says Mr Vinod Kapoor, former chairman of the Roller Flour Mills Federation of India.

“FCI has also made a smart move by offering 2.5 per cent commission to arthiyas in Uttar Pradesh. That will easily fetch them 20 lakh tonnes,” says Mr Raj Sud. Besides, five lakh tonnes have already been procured in Madhya Pradesh and it is seen topping 10 lakh tonnes.

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