For the 2024–25 season, the government sets a cautious aim of 30-32 million tons for wheat procurement

The government on Wednesday raised the aim for Grain procurement for the 2024–25 season (April–June) to around 30–32 million metric tons (mt), up from 26.2 mt acquired from farmers under Minimum support price (MSP) operations, amid predictions of a record wheat yield.

Sources informed FE that the government agreed to establish larger purchases under MSP operations after the meeting of state food secretaries of the major wheat-producing states. This is anticipated to support the Food Corporation of India (FCI)'s stock, which has recently fallen to an eight-year low.

The current estimates for procurement for the upcoming marketing season are 13 mt and 80 mt, respectively, in Punjab and Madhya Pradesh, two of the biggest suppliers to the central pool wheat supply. The 2024–25 season would see an MSP of Rs 2275 per quintal, up Rs 150 from the previous season, according to official announcements.

Strong crop might ease the supply of wheat

The procurement objective for the upcoming season, according to insiders, will be increased based on arrivals and purchases in the Mandis. In the 2022–2023 marketing season, FCI's purchase of wheat fell by 130% to 18.79 MT year over year due to decreasing output.

About 18 MT of wheat are needed by FCI each year to distribute grain under the Pradhan Mantri Garib Kalyana Anna Yojana, a free ration program. "We require adequate inventory to execute an open market sale of grain to the large purchasers in the upcoming year," an official informed FE. 

In the meanwhile, the administration has chosen to concentrate more on the states where wheat output and procurement are out of balance. The largest producer of grain, Uttar Pradesh, will start buying wheat from farmers on March 1. Rajasthan and Bihar will follow on March 10 and March 15, respectively.

While Punjab and Haryana will begin MSP purchasing operations on April 1, Madhya Pradesh will begin MSP operations on March 22. The Governments of Rajasthan and Madhya Pradesh have decided to provide farmers a bonus of Rs 125 per quintal beyond MSP.

Purchasing wheat is typically done between April and June.

The weekly e-auction wheat sales, which had reached a record-breaking 9.4 MT of sales to bulk customers since June of last year, were also discontinued by the government.

8.1 MT of wheat were sold via Open Market Sale Scheme (OMSS) in 2018–19, the largest amount ever. Only during the lean season (January-March), as per a previous strategy, has the company been selling excess wheat to bulk customers such as flour millers.

The lifting of grain for the Wednesday online auction, in which 0.46 MT of wheat was sold to large purchasers, will, according to authorities, continue until the third week of March.

The wheat stock at FCI is 10.34 MT at the moment, the lowest level since 2016.

Wheat inflation decreased further in January to 2.33% from 4.69% in December of last year as a result of improved supply brought about by FCI's active open market grain sales.

The Indian Council for Agricultural Research's director general, Himanshu Pathak, stated that the crop year 2023–24 (July–June) is expected to witness record wheat output of 114–115 mt, with 85% of the acreage planted to climate-resilient seed types.