Farm min says policy flaw makes govt biggest wheat buyer, seeks CCI probe

Nov 24 2012, 01:14 IST
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SummaryA key technical wing of the agriculture ministry has blamed the Centre’s open-ended grain procurement policy for the government becoming “the single largest procurer and hoarder” of wheat even as private trade is starved and prices flare up, and recommended that the Competition Commission of India look into this anti-competitive practice.

year from FCI through levies in states like Punjab, Haryana, AP and MP,” CACP said in its “Price policy for rabi crops” report.

Haryana, Punjab, Uttar Pradesh, Madhya Pradesh and Rajasthan account for about 98% of the total wheat procurement in the country. The CACP also pointed out that in these states where the market prices of wheat have been ruling below the MSP, 85-90% of the grain arrival is procured by the government, crowding out private players and leashing market forces. The commission also expressed doubts about the efficacy of the price policy in terms of ensuring remunerative prices to farmers, who it said do not always get the MSP and are forced to sell in distress.

As the accompanying tables show, thanks to the open-ended procurement policy, FCI and other state agencies have ramped up their purchases without due consideration of the market realities. Procurement in Madhya Pradesh has more than doubled during the last three years to 8.4 million tonnes.

“We have been providing bonus to wheat farmers over the last few years and want to become the single biggest contributor of wheat to the central pool in the next few years,” chief minister Shivraj Singh Chouhan had told FE earlier.

The record wheat procurement of close to 39 million tonnes (41% of the total output) by FCI and state government-owned agencies from this year’s production of close to 94 million tonnes has deprived the processors of any source to buy the grain other than the government. “We are forced to depend on wheat under the government's open market sale scheme because of lack of availability of wheat in the open market,” said Adi Narayan Gupta, president, Roller Flour Millers Federation of India.

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