India Plans To Loosen Wheat Procurement Rules to Replenish Supplies

According to government officials and traders who spoke to Reuters, India is considering easing procurement regulations for wheat from farmers. This decision comes in the wake of untimely rainfall and hail, which caused damage to the crop just before harvesting in central and northern states’ key wheat-producing regions.

India, the second-largest wheat producer in the world, intends to purchase 34.15 million tonnes of new-season wheat from local farmers to augment state reserves. This move is aimed at compensating for the previous year's poor harvest, which resulted in a 53% drop in purchases to 18.8 million tonnes.

A senior government official, who chose to remain anonymous, reported that the new season's wheat has begun to arrive in the market. However, in some districts, the harvest has been lacklustre due to recent rainfall.

An official who preferred to remain anonymous per official regulations stated, “Madhya Pradesh has been permitted to procure wheat with a 10% loss in lustre.” The official also stated that “if necessary, they would consider other states and factors such as moisture.”

Madhya Pradesh, is the second largest producer of wheat in the country, trailing only behind the northern state of Punjab.

However, recent rainfall has also caused damage to the wheat crop in Punjab and Haryana, potentially forcing the government to implement similar changes to procurement rules in these states. This information was shared by a trader based in New Delhi who works for a global trade house.

In 2022, Punjab, Haryana, and Madhya Pradesh were responsible for over 98% of the total wheat procurement.

A trader noted that crop with lower lustre was being sold at a significant markdown compared to high-quality crop in the market. However, government purchasing would put an end to this unfavorable sale situation.

According to a government official, state-run agencies have procured 260,000 tonnes of wheat from farmers as of April 2, which is a substantial increase from the 46,000 tonnes procured in the previous year.

According to the official, there will be an increase in buying activity over the next few weeks, which was previously hindered due to the rainfall and did not achieve the desired level of momentum.

-Reuters 

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