Madhya Pradesh: Wheat prices fall below MSP on the back of bumper crop, FCI open market offloading

Last year, procurement fell both from the state (46.03 lt) and all-India level (187.92 lt), courtesy to a poor crop as well as higher open market prices fueled by export demand.

Tridevi, who is associated with the Rashtriya Swayamsevak Sangh-affiliated Bharatiya Kisan Sangh and Sahakar Bharati farmer and cooperatives organisations, warned that a delay in the start of MSP purchase operations could cost the ruling BJP dear in an election year. The state is scheduled to go for Assembly polls by November.

The MP government has announced commencement of wheat procurement from March 25, even as market arrivals of the crop – much of which is sown by the first week of November – have started early this month. Farmers in MP are required to register themselves before the marketing season for selling wheat to state agencies at MSP.

“Many farmers here did not register this time, thinking that private traders and flour millers would pay more than the MSP. Prices in mandis such as Indore, Ujjain, Badnagar, Dhar and Badnawar were at Rs 2,800-3,000 per quintal until January-end,” noted Bane Singh Chauhan, who cultivates wheat in 25 hectares at Lohari Bujurg village of Dhar district and tehsil.

The spoiler has been the Centre’s open market sale scheme. Under it, a total 45 lakh tonnes (lt) of wheat was allocated from FCI’s stocks for sales to millers and bulk consumers through e-auctions during February-March. So far, 33.77 lt out of the overall 45 lt allocation have been sold in six auctions at all-India weighted average prices ranging from Rs 2,474/quintal on February 1-2 to Rs 2,172 on February 23 (see table).

“The dumping of wheat by the FCI has brought down prices. Now, farmers, who did not register for selling their crop to the government at MSP, will be at the mercy of traders. The situation would become worse if there is rain, causing damage to the grain. The traders will, then, cite high moisture and luster loss to further drag down prices,” added Chauhan.

The MP government’s department of food, civil supplies and consumer protection had initially allowed registrations up to February 28, which was subsequently extended to March 10. The department’s online ‘e-uparjan’ portal has since stopped accepting fresh registrations.

According to Trivedi, the number of farmers registered in the Indore division (covering Dhar, Jhabua, Alirajpur, Barwani, Khargone, Khandwa and Burhanpur districts) has fallen from 1,50,701 to 1,17,352 this year.

The total crop area in the division for the current season, based on the revenue department’s ‘girdawari’ report, was 12.36 lakh hectares (lh). As against this, the area sown by the farmers who had registered was only 2.86 lh. It means that the crop grown on the balance 9.5 lh will not be covered under MSP procurement. And this is for a single division of the state.

Trivedi demanded that the MP government do two things. The first is to reopen ‘panjiyan (registrations)’ to enable maximum number of farmers to avail of MSP and start procurement at the earliest. The second is to lift the present cap of procurement fixed at 40 quintals per hectare. “Many farmers harvest 60 quintals or more. Should they suffer for being more productive?” he asked.

MP is the second largest contributor of wheat, after Punjab, to the Central pool. In the 2020-21 crop year, it accounted for 128.16 lt out of the total 433.44 lt wheat that was procured by government agencies. Last year, procurement fell both from the state (46.03 lt) and all-India level (187.92 lt), courtesy to a poor crop as well as higher open market prices fueled by export demand.

This time, the yield of wheat looks good, both in MP and other states. And that’s being reflected in prices coming down or even falling below the MSP.