The buyer changes,but MP doesn’t mind

The buyer changes,but MP doesn’t mind

Private players return for wheat,govt misses procurement target but says happy farmers earned

A year ago,wheat growers in Madhya Pradesh were desperate to sell their produce to the government because of the prices on offer,which in turn led to private players staying away from the market. The government responded by announcing that no farmer would be sent home till the last grain had been purchased and even extended the procurement deadline to make that happen.

In stark contrast,government purchasing agencies this year kept waiting for wheat growers and even extended the deadline anticipating a last-minute rush. They did turn up but in much smaller numbers than expected.

In the process,the government missed its procurement target of 110 lakh tonnes by an embarrassing 45 lakh,and yet there was no disappointment simply because farmers seemed to have made a killing,thanks to the return of private companies and traders who purchased aggressively.

Major wheat growing states Punjab and Haryana also contributed much less to the central pool because production was lower than usual in these states,unlike MP that claims to have actually produced more wheat than last year.


Procurement from MP in 2012 was a whopping 85 lakh tonnes,leading to a projected estimate of 110 lakh tonnes for this year.

When a Rs 150 bonus was added to the MSP of Rs 1,350,the government was buying wheat at Rs 1,500 in MP,the highest rate in the country. But private players offered even more,having learnt from the previous year’s experience when there was no wheat in the market.

“When even the normal FAQ wheat fetched between Rs 1,600 and Rs 1,750 at agriculture produce marketing yards,the farmer was expected to prefer private players over government,’’ says director (agriculture) D N Sharma.

According to government figures,161 lakh tonnes wheat was produced this year (according to third estimates; the final figure is yet to come). This was a substantial increase from last year’s 145 lakh tonnes (final figure). When the third estimates were released last year,the total was 129 lakh tonnes. Sharma says this year five lakh additional acres came under wheat.

Besides the private players,the drop in procurement is being attributed to big farmers themselves,who are believed to have held back stock anticipating that the prices would go up later. When the market prices shot up long after the procurement season was over,some farmers realised they would have been better off had they not sold everything to the government.

The government has seen a silver lining in the reduced procurement because last’s year unprecedented volumes had stretched its storage capacities leading to spillage and wastage. Rotting grain was a frequent sight.

“Our aim was to ensure that the farmer gets his due. If he has got more than we were offering,it has served our purpose,” says Food and Civil Supplies Minister Paras Jain.

Having estimated procurement at 110 lakh tonnes,the state government had purchased a large number of gunny bags and entered into agreements with private warehouses. While the bags would come handy to store rice after it is procured,warehouse owners had to be paid the money according to the terms of agreement.

And yet the government claims to have saved more than it lost. “We probably lost Rs 35 to Rs 40 per quintal (on wheat that was not purchased) but then we saved the bonus of Rs 150,” says Sharma.

“Whatever has happened is good. The government has no business doing what private players and traders should be doing. The government staff and resources get engaged in the procurement process and once it’s over the grains rot due to lack of storage,” says agriculture expert G S Kaushal.

Chairman of the MP State Civil Supplies Corporation Ramesh Sharma strikes a different note. While he talks of aggressive buying by private players and farmers holding back some stocks,he believes there was some drop in production.


There’s indeed some mismatch in figures because there are only estimates about the quantities purchased by private players and traders. Moreover,a few months ago the government had sought money from the Centre to compensate farmers who lost produce due to unseasonal rains,frost and hail storm.