15-year low Wheat Procurement

May 11, 2022

In the current marketing season, Wheat procurement by government agencies is set to dip to a 15-year low.

How much Wheat procurement is expected in the current season?

It is expected that 18.5 million tonnes (mt) of wheat will be procured this time by government agencies. This will be the lowest since the 11.1 mt bought in 2007-08. Also, this time wheat procured from the new crop (18.5 mt) is less than the public stocks at the start of the marketing season (19 mt). Usually, fresh procurement always exceeds the opening balance stocks.

How much Wheat can be sold by the government?

With opening stocks of 19 mt and expected procurement of 18.5 mt, government agencies would have 37.5 mt of wheat available for 2022-23. A minimum operational stock-cum-strategic reserve also has to be maintained. For which, the closing stock requirement for March 31^st is 7.5 mt. After that 30 mt will be available for sale from government godowns this fiscal.

Is the quantity sufficient for government welfare schemes?

The quantity with the government will be sufficient for the public distribution system (PDS), midday meals, and other regular welfare schemes, whose annual wheat requirement is around 26 mt. However, over the last two years, wheat requirements increased because of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) scheme and open market sales to flour mills, for which wheat quantity will be insufficient. The Centre recently decided to slash allocation under the PMGKAY from 10.9 mt to 5.4 mt for April-September 2022.

How much wheat was procured in 2021-22 by the government agencies?

The year 2021-22 witnessed unprecedented levels of both opening stocks (27.3 mt) and procurement (43.3 mt).

Why wheat procurement by government agencies has fallen this time?

Increasing export demand: Supply disruptions from the Russia-Ukraine war led to skyrocketing prices and a further increase in demand for Indian wheat.
Lower production of wheat: The sudden spike in temperatures from the second half of March has reduced the yield. In most wheat-growing areas farmers have reported a 15-20% decline in per-acre yields.