Government aims for a blockbuster procurement year for wheat

The government expects to purchase a record 32 million tonnes of wheat this summer, almost 40% of India’s total production for the entire year, according to new estimates released by the government.

In contrast, it had a target of buying 26 million tonnes of wheat last year, which it exceeded in practice by 2.3 million tonnes in the rabi season (winter-spring) 2011, setting a new record.

India produces about 80-85 million tonnes of wheat in a full year, nearly all of it in the winter-spring Rabi season.

The number is significant in light of the worries expressed by experts about the inflationary and market-altering impact of government procurement in India’s grain market.

For example, out of the 180-200 million tonnes of rice and wheat produced in a year, the government used to soak up about 33-40% using its procurement mechanism. The grain is then further subsidized and sent to ration-dealers. The ration-shops are then supposed to allot the subsidized grain to the citizens.

With the government under pressure to keep the farming population in good humor, the procurement prices for most food items have shot through the roof, more than doubling in a matter of 6 or 7 years in some cases.

The central government’s estimate is based on the collation of different state estimates.

Procurement is done between 1st April and 30th June, 2012 for majority of States except Maharashtra, Madhya Pradesh and Gujarat where it will start on 15th March. In Bihar and Jammu & Kashmir, the procurement will start from 15th April, 2012, the government said.