Wheat purchase slow & low, Govt calls for imports to beef up its buffer stocks

Slow purchase of wheat at home has again forced India to look to the international market. The Government has directed the State Trading Corporation to import one million tonne of wheat to buttress the buffer stock.

Slow purchase of wheat at home has again forced India to look to the international market. The Government has directed the State Trading Corporation (STC) to import one million tonne of wheat to buttress the buffer stock.

“The government has decided that action may be initiated by STC for import of one million tonne of wheat in suitable tranches by July 2007 since there can be no compromise on food security,” Minister of State for Agriculture Akhilesh Prasad Singh told Parliament today.

Tender details, including when and where the grain will arrive, are still being worked out.

Story continues below this ad

Agriculture Minister Sharad Pawar had indicated that last month that the country may buy 300,000 tonnes of wheat in 2007 if there was local shortage.

So far, procurement has been slow despite a good crop. According to estimates, wheat production is likely to be 73.6 million tonnes in 2006-07, up from 69.4 million tonnes in 2005-06.

But procurement, until last week, was estimated at 7.4 million tonnes against a target of 15 million tonnes.

In Punjab and Haryana, farmers have been holding back stocks in the hope they get higher prices in coming months. These two states were expected to contribute at least 11 million tonnes, a substantial portion of total government purchases. Farmers not burdened by debts are holding on to the wheat stock, expecting a better price than the Rs 850 offered by FCI.

Story continues below this ad

In Rajasthan, UP and Madhya Pradesh, private companies have been quick to procure large volumes even before the wheat reaches the mandi. The Central government, deciding to act tough, has written to these states to at least procure enough for their PDS requirements.

The government is also considering hedging against possible costly grain imports this year by asking firms to agree prices in advance in return for a non-refundable premium.

Bids would contain a call option which gives a buyer the right to purchase a commodity at a specified price within a specific time period.

Wheat stock in the Central pool as on March 31, 2007 was 45.63 lakh tones, a little more more than the buffer norms of 40 lakh tonnes. The Government had imported 55 lakh tonnes of wheat for PDS and other social welfare measures during 2006-07 to improve stock position in the Central pool.