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Informist, Friday, May 23, 2025

 

By Afra Abubacker 

 

NEW DELHI – India's wheat procurement in 2025-26 (Apr-Mar) is shaping up to be the most successful in three years. However, rising private trade in key producing states has forced the government to temper its expectations. Officials now see procurement falling short of the ambitious 33.3-million-tonne target.

 

Private purchases increased in many states as traders offered rates above the minimum support price of INR 2,425 per 100 kg. Also, private players offer farmers payments in instalments--during sowing, Diwali and delivery, while the government pays MSP after the crop is procured.

 

According to Food Secretary Sanjeev Chopra, the Centre expects total wheat procurement to close around 30.0 million tonnes when the official procurement season ends Jun. 30. With procurement complete in many states and running the final stretch in others, only marginal gains are expected going forward. "So whatever will come now, it will come from Uttar Pradesh and Rajasthan," Chopra said earlier this week. 

 

As of Wednesday, the government procured nearly 29.7 million tonnes wheat, meeting 89% of the revised target, data from the Food Corp. of India showed. This is a robust 12% increase from last year's total procurement of 26.6 million tonnes. Wheat procurement was 26.2 million tonnes in FY24, 18.8 million tonnes in FY23.

 

"We thought we would do more in Uttar Pradesh and Punjab," Chopra said. A key factor behind the underperformance, he said, was strong private purchases. "The pipeline was stretched (last year), and private parties bought more."

 

PUNJAB SLIPS SLIGHTLY

Punjab, typically the top contributor to the central stock pool, closed its wheat procurement at 11.9 million tonnes--short of its 12.4-million-tonne target and down 3.5% from last year.

 

However, officials say the quality of procured wheat this year is among the best in several years. "Last year, a lot of wheat was bought under relaxed specifications. This time, the quality is far superior," a state official said.

 

Of the 13.0 million tonnes of wheat that arrived in Punjab's mandis, 11.9 million tonnes were procured by government agencies, while private traders picked up 1.1 million tonnes—up from 700,000 tonnes last year, officials said. "Private purchases were higher because the Centre delayed open market sales despite tight conditions," Dinam Sood, a Punjab-based miller, said. 

 

Despite the one-year dip, Punjab retained its top spot, contributing over 40% to central stocks. Haryana procured 7.14 million tonnes of wheat, against the 7.5 million tonnes target. On year, Haryana wheat procurement is largely the same. 

 

UP: PRIVATE HUB

Uttar Pradesh, India's largest wheat producer, continues to underperform in government procurement. It has managed to procure only 1 million tonnes of wheat so far--about 34% of its 3-million-tonne target. While that's a 12% improvement from last year, poor procurement infrastructure has kept the state on the sidelines in the government's procurement programme.

 

Yet, this shortfall hasn't hurt the state's wheat industry. On the brighter side, it has kept the "wheat industry independent," said Sandeep Bansal, a miller based in the state.

 

The private market has been buzzing. Traders and farmers are reportedly holding back significant stocks, Bansal said. Wheat has given phenomenal returns, rising from INR 2,200 per 100 kg in April 2024 to INR 3,300 per 100 kg in early 2025, registering an over 30% gain. "That is why all have joined the party," Bansal said.

 

Having stocked wheat during peak arrival season, Uttar Pradesh market is set to provide a year-round supply. It need not wait for the government to release wheat from its godowns through open-market sales.

 

However, Bansal said the state could have done more on procurement. "There was only a half-hearted attempt by the government. There was no coupling between the government and the farmers. They did not declare any commission to agents or Arhtiyas in UP," Bansal said. Punjab and Haryana offer 2.5% commission to agents, which accelerates procurement. 

 

"Instead of making noise about the early procurement start, they should have focused on infrastructure—there wasn't enough labour or even gunny bags in many centres," he added.

 

THE BRIGHT SPOTS

Madhya Pradesh emerged as the star performer, with procurement touching 7.8 million tonnes of wheat against a target of 8 million tonnes. The state's decision to offer a bonus of INR 175 per 100 kg over the Centre's minimum support price of INR 2,425 per 100 kg played a decisive role. Better weather and improved yields also helped production. "Nearly 90% of the wheat is of Fair Average Quality this year," said Alok Malviya, a miller in the state, said.

 

The generous bonus also pushed private buyers out. "Seeing the bonus, a lot of traders and MNCs moved away from MP and booked warehouses in UP," Bansal said.

 

In fact, the Centre revised its FY26 wheat procurement target twice--first to 32.3 million tonnes and then to 33.3 million tonnes--primarily on the back of Madhya Pradesh's performance. The state didn't disappoint as it almost met its 8-million-tonne target. Last year, untimely rains in Madhya Pradesh and firm market prices had weighed on wheat procurement in the state and pulled down national procurement numbers. 

 

Rajasthan, too, saw an exceptional season. With a state-declared bonus of INR 150 per 100 kg, wheat procurement surged over 87% on year to 1.8 million tonnes, nearing its 2-million-tonne target.

 

The rebound in wheat procurement is not just a win for government warehouses, it has larger economic implications. Strong procurement and healthy stocks have allowed officials and traders to rule out the need for imports this year.

 

However, the government's on-record conservative forecast of a 30-million-tonne level procurement has reopened discussions on stock limits in the market. Asked about stock limit reimposition, Chopra said, "Let's see. We will come to know once the decision is made." The Centre had lifted stock limits on wheat from Apr. 1, and has only mandated weekly disclosure. For the past two years, stockholding restrictions distorted trade and limited bulk buying.  

 

Amid robust wheat procurement and high opening stocks with FCI, the government and market see no inflationary concern. As of May 1, wheat stocks with the Food Corp. of India stood at a four-year high of 35.7 million tonnes, up 37% from a year ago.

 

The government's procurement policy this year has demonstrated that timely incentives and operational readiness can ensure good procurement. The state wheat reserve feeds 800 million people through welfare programmes, and checks inflation through open market sales. 

 

However, if not for the good wheat output this year, the government is unlikely to have scaled procurement to the present levels amid rising private competition. The government has pegged a record wheat output in 2024-25 (Jul-Jun) at 115.4 million tonnes, up nearly 2% on year. 

 

Thanks to increased sowing by farmers and good weather, both government and private parties had enough to take, and that, too, good quality.  End

 

Edited by Deepshikha Bhardwaj

 

 

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