The central government has set a target of procuring 300 lakh tonnes of wheat for the 2024-25 Rabi season, a figure deemed to be practical in light of past experiences and consultations with food secretaries of major producing states. However, the actual procurement has consistently fallen short of targets in recent years. For instance, in 2024, the target was 300-320 lakh tonnes, but only 266 lakh tonnes were procured. Similarly, in 2022, the target was 341.5 lakh tonnes, but only 262 lakh tonnes were procured. This gap between targets and actual procurement raises concerns about the effectiveness of the government's wheat procurement strategy.
Several factors contribute to this issue:
Higher Market Prices: Despite annual increases in the Minimum Support Price (MSP) of wheat, domestic market prices remain higher than the MSP. Farmers often withhold their wheat stocks in anticipation of further price increases, limiting the amount they are willing to sell at the MSP. This further restricts the amount available for procurement by the Food Corporation of India (FCI).
Incentives for Farmers: In 2024-25, the government has increased the MSP by Rs 150 to Rs 2425 per quintal, with an additional bonus of Rs 125 per quintal offered in states like Rajasthan and Madhya Pradesh. While this may encourage higher prices in these regions, it could also discourage farmers from selling at the MSP, especially if the market price remains more attractive.
Weather Conditions: The government aims for a record wheat production of 1150 lakh tonnes, but this hinges on favorable weather conditions. The current acreage is favorable, with wheat being grown on 319 lakh hectares, but the critical period from mid-January to mid-April will determine the actual yield.
Unrealistic Production Targets: The government's optimistic production target may contribute to market confusion, as actual production has historically fallen short of these figures. Setting more realistic and conservative targets could help alleviate uncertainty in the wheat market.
In summary, while the government has set an ambitious procurement target, it faces challenges from higher market prices, farmer behavior, and uncertain weather conditions. A more pragmatic approach, including adjusting procurement targets to align with actual production, could help stabilize the market and improve procurement outcomes.