Wheat purchases by Indian state agencies have started strongly in the new season, further boosting government stocks and leading to industry calls to allow exports after a two-year ban.
Farmers in the key wheat-surplus states of Punjab and Haryana were expected to begin selling in early April as recent showers have delayed the harvest, but official agencies in other states have reported sharply higher sales from farmers.
Food Corporation of India (FCI), the main grain procurement agency, has bought 208,528 tonnes of wheat as of April 1, nearly 2-1/2 times what they did in the same period a year ago, government officials told Reuters.
Last year’s record output of 78.57 million tonnes helped the government purchase a record amount of wheat from farmers. It uses the wheat stocks to manage prices and distribute to the poor.
“If procurement from Rajasthan and Madhya Pradesh is so high, you can easily imagine stock levels once procurement picks up in Punjab and Haryana,” said Pramod Kumar, a past president of the Karnataka Roller Flour Mills Association and big wheat trader.
Traders and analysts believe FCI’s wheat stocks would have touched 14 million tonnes, against a target of four million tonnes on April 1 when the new marketing season begins.
The FCI is expected to mop up about 24 million tonnes in 2009 against 22.6 million tonnes procured a year ago, they say.
“What will the government do with such huge stocks?” asked Kumar, adding that exports should have been allowed in August to make room for the new harvest.
Traders and analysts say if India, the world’s biggest wheat producer after China, allows exports of the grain, overseas sales would need subsidies from the government as global prices have slumped.