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Private wheat purchases at Punjab mandis hit 15-year high, but farmers struggle to recover costs

The lower premium over MSP that the farmers in Punjab are receiving is being attributed to the high levies payable on grain purchases from the state's APMC mandis.

Written by Anju Agnihotri Chaba | Jalandhar |
Updated: May 6, 2022 11:15:20 am
Punjab wheat mandi purchases hit 15-year high, but farmers struggle to recover costsPrivate purchase of wheat from Punjab in the ongoing marketing season, which began in April, was 5.89 lakh tonnes as of Wednesday, compared to 1.14 lakh tonnes in 2021 and the highest since 9.18 lakh tonnes in 2007. (Express Photo)

Private wheat purchases from mandis (markets) in Punjab this marketing season have touched a 15-year high of almost six lakh tonnes. But farmers are not happy. The reason? Flour millers and traders are paying them Rs 5-10 above the minimum support price (MSP) of Rs 2,015 per quintal and that is hardly covering the yield losses from the early onset of summer when the crop was still in the grain-filling stage.

Darshan Singh, a farmer from the village of Sarawan in Faridkot district’s Jaitu tehsil, sold 109 quintals of wheat to a private trader at the local APMC (agricultural produce market committee) mandi for Rs 2,020 per quintal. Last year, he sold 126 quintals harvested from the same six-acre land at the then MSP of Rs 1,975 per quintal. Despite the selling price being Rs 45 per quintal higher, his overall revenue is down from Rs 2.49 lakh to Rs 2.2 lakh.

“My average yield last year was 21 quintals per acre while this time it was just over 18 quintals. Rs 5 per quintal more than the MSP isn’t any compensation,” said Singh, whose arhatiya (commission agent-cum-financier) told him to sell to the trader.

The losses are even steeper for Lakhvir Singh from Jalanpur village in Ludhiana district’s Samrala tehsil. His 10 acres — five that he owns and the rest on lease — have produced just 150 quintals, down from 220 quintals last year. “I went to the mandi to sell to the government agency at the MSP of Rs 2,015 per quintal. My arhatiya quietly directed me to a miller who paid Rs 2,020 per quintal. How does this offset my seven quintals average yield loss?” he asked.

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Most farmers The Indian Express spoke to reported losses of four to five quintals per acre because of the sudden spike in temperature from mid-March, leading to the premature ripening and shrivelling of grains. Gurmail Singh, who grows wheat on 24 acres (12 of his own and 12 leased) in Alaur village in Ludhiana’s Khanna tehsil, claimed that his yields had halved from 21 to 10.5 quintals per acre this time.

“I am told farmers in Rajasthan and Madhya Pradesh have sold their wheat at Rs 150-200 per quintal above the MSP. Here, we are getting just Rs 5-10 more, which is a cruel joke,” said the farmer, who sold 235 of the 253 quintals of his crop to a Khanna-based roller flour mill at Rs 2,020 per quintal.

The lower premium over MSP that the farmers in Punjab are receiving is being attributed to the high levies payable on grain purchases from the state’s APMC mandis. These include a three per cent rural development cess and a three per cent market development fee. In contrast, Rajasthan charges a 1.6 per cent market fee, Uttar Pradesh 1.5 per cent, and 0.5 per cent in Madhya Pradesh.

“High taxes meant that flour millers in Punjab were until last year sourcing their wheat at below MSP from UP and Rajasthan. Even after adding transport charges, it worked out cheaper than buying from Punjab at MSP plus the six per cent levies,” explained a Food Corporation of India official.

That equation has changed this year due to a heatwave-induced lower crop yield — the Centre has yet to revise downwards its all-time-high production estimate of 111.32 million tonnes made in mid-February — and high demand for Indian wheat because of supply disruptions caused by the Russia-Ukraine war.

“Today, wheat is selling near or above MSP in most states. Bringing that wheat to Punjab will cost Rs 2,400-2,500 per quintal after adding transport costs. So, it is worthwhile now for millers here to buy from within Punjab by paying Rs 5-10 per quintal higher than the MSP. The six per cent taxes won’t bite as before,” the official added.

As a result, private purchases of wheat from Punjab in the ongoing marketing season, which began in April, was 5.89 lakh tonnes as of Wednesday, compared to 1.14 lakh tonnes in 2021 and the highest since 9.18 lakh tonnes in 2007. But these purchases haven’t benefited farmers even as government procurement, at 94.83 lakh tonnes so far, is set to hit a 15-year low after last year’s record of 132.14 lakh tonnes.

Bhartiya Kisan Union (Dakaunda) general secretary Jagmohan Singh said the Aam Aadmi Party government in Punjab should not waive the APMC levies to enable traders and millers to pay higher prices to farmers.

“These fees are necessary for public welfare and the upkeep of our mandis. The government should, instead, have announced a good bonus above the MSP, forcing the private trade to pay more to farmers and compensate them for yield losses,” said Singh, whose union actively participated in the 2020-’21 protests against the Centre’s three farm laws.

Federation of Arhatiya Association Punjab president Vijay Kalra said a bonus of Rs 100 per quintal would have led to higher government procurement. “That extra cost the government could easily recover by selling in the open market later on, especially since prices are likely to further go up,” he added.

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