The shortage of wheat supplies, currently being witnessed in the country, is not due to hoarding as is being feared by the Centre. Data show that wheat arrivals at agricultural produce marketing committee (APMC) yards across the country have exhibited almost the same trend over the past 17 years. The Indian government blames traders and large farmers for curbing wheat supplies by retaining stocks with them, though.
The Centre finds the restriction of supplies by farmers as one of the factors for current price spiral. Experts beg to differ with the view pointing out to data of the past 17 years, including when the Government had to import 5 million tonnes (mt) for distribution through ration shops.
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Higher procurement
According to Agriculture Ministry data analysed between March and July (when the maximum volume of wheat crop arrives in the market), 21.29 mt have arrived this year, which is 19 per cent of the estimated record production of 112.74 mt in the 2022-23 crop year (July-June). The wheat arrival was 20.77 mt during March-July of 2022, which also is 19 per cent of the production of 107.74 mt. Procurement data of the Food Corporation of India (FCI) are not accounted for in mandi arrivals.
The government’s wheat procurement in 2023 was 8 mt higher from the year ago period, whereas the production was up by 5 mt. So, there is additional 3 mt stock kept in warehouses of Food Corporation of India (FCI), said a top executive of a leading processing firm. He said the Government should liquidate as much stock as possible without doubting its own production estimate as such a fear of an impending shortage in January has sent a negative message to traders who withheld the grain’s release anticipating further increase in prices.
Data show that the mandi arrivals were 26-37 per cent of corresponding annual production between 2014 and 2018 and it dropped to 22 per cent in 2019. However, arrivals were 14 per cent and 16 per cent in 2020 and 2021, respectively due to Covid-19.
“There is a stupendous growth in consumption of value-added wheat products after 2015-16. It is estimated to have reached about 6 mt per year now. Manufacturers/processors of such products and others are mostly directly buying through their agents instead of going to mandis to ensure better quality,” the top executive said.
MSP hike
According to Consumer Affairs Ministry data, the average retail price of wheat has increased 48 per cent to ₹32.03/kg in 2023 (January 1-August 9) from ₹21.65/kg in 2014 (January-December). Similarly, the MSP has been hiked by 52 per cent to ₹2,125/quintal in 2022-23 from ₹1,400/quintal in 2023-14.
Experts also said the increase in annual average retail price of wheat in the last few years, barring 2022, was in sync with the rise in minimum support price (MSP) and there is no extra-ordinary hike in prices. “How is it possible to expect zero inflation when MSP has been raised at about 5 per cent annually,” an industry expert said.
Food Secretary Sanjeev Chopra on August 9 had said there is no shortage of wheat in the country and large farmers and traders still are holding the grain in anticipation of a similar hike in prices as they saw last year.
“Compare the arrival data of other crops such as cotton which cannot be withheld by farmers to find out whether more agri products are getting traded outside mandis,” said P S Birthal, director of National Institute of Agricultural Economics and Policy Research (NIAP). He feared the production may not be record high as estimated since the Government has been continuously taking measures to bring down prices.