Wheat price below MSP
Arrival of new crop from Rajasthan, MP, Gujarat pulls down prices
The price of wheat has fallen below the government-set minimum support price of ~1,735 a quintal. Prices started falling from the second half of March as the new crop started arriving from Madhya Pradesh, Rajasthan and Gujarat.
This early crop’s quality had got damaged due to lateseason hailstorms a month before; small farmers began selling, without waiting for official procurement agencies. In the past two weeks, prices at wholesale markets (mandis) have fallen by 6 to 8 per cent.
Oilseeds, pulses and even cotton in some areas are trading below their MSP. Wheat, largest crop after paddy, has joined the list.
MP government has announced cash incentives of ~265 per quintal over and above MSP and price guarantee or Bhavantar scheme has been made available to all farmers.
At present, average quality wheat in Saurashtra's markets are ~1,550 a qtl. At the MP and Maharashtra mandis, it is around ~1,650. Good quality wheat is fetching ~2,100 a qtl.
Prerana Desai, research head at Edelweiss Agri Services and Credit, said: “Prices have fallen below the MSP due to high moisture content in wheat that is arriving, because of hailstorms ahead of harvesting in many areas. We assume the crop to be lower by 8 to 10 per cent as compared to last year, when there was a record crop at 98.5 million tonnes (mt), by government estimates. The crop size will become clear once the harvest is complete.”
She believes India will have to continue importing wheat. Last year, there were 5.7 mt of import.
She, however, believes wheat prices might not stay below the MSP once arrivals drop below expectation. In the mandis of Punjab and Haryana, the largest producers (followed by UP), arrivals are expected to start in 10 days. However, this would depend also on the extent of crop damage.
Devendra Vora, director, Friendship Traders, said: “So long as low quality or damaged crop continues to arrive, prices are unlikely to enter a bullish zone.” The lower realisation due to poor quality had put several farmers unable to realise even their cost of production, he added.
Ajay Goyal, managing director at Shivaji Flour Mills, said, “One reason for prices below MSP is because the government procurement machinery in western Maharashtra is not that efficient; nor there are enough centres.
Flour mills, specially smaller ones, don’t have liquidity to stock. Smaller mills have been hand to mouth for some years, due to government policies and difficulties in credit facilities.”
Food Corporation of India's procurement target for 2018-19 is 32 mt, as against 30.82 mt in 2017-18. Of the total target, Punjab's is 11.9 mt, followed by Haryana at 7.4 mt, Madhya Pradesh at 6.7 mt, Uttar Pradesh four mt, Bihar 2 mt, Rajasthan 1.6 mt and Uttarakhand at 1 mt.
Oilseeds, pulses and even cotton in some areas are trading below their MSP