Given the ballooning costs of storing grain, there is an urgent need to cut down excessive procurement of rice and wheat
In 2018-19, wheat procurement at 35.8 million tonnes (mt) was the second highest ever. It is estimated that by the end of kharif marketing season in September, rice procurement may also touch an all-time high of 45 mt. With such high procurement, one of the first difficult challenges the new government will face in May will be to manage the excessive stock of foodgrains (central pool stocks) with the FCI and State government agencies.
On April 1, the central pool is likely to have rice stocks of 28.4 mt and wheat stocks of 17.6 mt. Low temperatures and a rather prolonged winter this year are likely to result in higher productivity and wheat production may reach 102 mt, about 3 mt higher than the government’s second advance estimate of 99 mt.
In 2018-19, the open market prices of wheat have risen by about 10 per cent but with an attractive MSP of ?1,860 per quintal and a bonus of ?140 per quintal in Madhya Pradesh, we can expect wheat procurement to match last year’s level of about 36 mt.
The buffer norm for wheat for July 1 is 27.58 mt against which India is likely to have stock of 47.6 mt. The buffer norm for rice is 13.54 mt but the stock is estimated to touch 29.6 mt. Thus, the country will be saddled with 77.2 mt of wheat and rice stock against the buffer norm of only 41.1 mt.
Fortunately, 15 mt of covered storage capacity has been added since 2010 under Private Entrepreneurs Guarantee Scheme (PEG) of 2008. Without this, there would have been no godown space for rice procurement even in Punjab and Haryana.
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