May 18, 2013

Wheat arrivals in India begin to dwindle. Raises questions about the credibility of production estimates.

Wheat arrivals have slowed down in India

Wheat arrivals in the mandis have slowed down. Compared to 2012 marketing season, wheat arrivals this year have come down to a trickle. Although food procurement agencies believe it is because farmers are anticipating a higher return in the months to come and so are holding up the harvest, the question that cannot be ignored is whether the estimates of mandi arrivals were exaggerated?

According to a news report in Dainik Jagran (May 17, 2013) the daily arrivals in different mandis of the wheat belt have shrunk to 1.71 lakh tonnes as against the average of 4 lakh tonnes in the same period last year. The total arrivals in the mandis till May 15 (the procurement season begins from April 1 and lasts till June) was 27.3 million tonnes compared to 31.6 million tonnes last year. This is a clear drop of 4.3 million tonnes till now.

In Punjab, the wheat bowl, as against 81,000 tonnes arrival in 2012, the arrivals this year have slowed down to 25,000 tonnes. In neighbouring Haryana it is much worse. The arrivals, 28,000 tonnes in 2012, have now been reduced to a trickle. The average daily arrival now is 4,000 tonnes. In Madhya Pradesh too, wheat arrivals have slowed down, from 12.1 million tonnes in 2012 to 73,000 tonnes in 2013. Uttar Pradesh too is faced with the same dilemma. Against 14.1 million tonnes in 2012, the arrivals have come down to 36,000 tonnes now.

It is expected that by the time the marketing season ends in June, and with such low arrivals, the procurement will be down by about 10 million tonnes. This shortfall is against the record estimate of 44 million tonne of wheat procurement that has been announced with much fanfare. I am aware that the Ministry of Food & Consumer Affairs is worried at the slackening procurement figures in the light of the ambitious targets set under the proposed National Food Security bill, but what needs to be ascertained is whether the procurement estimates were deliberately inflated and blown out of proportion to provide a feel good factor for the slowing economy? Were the production and procurement estimates magnified to make a case for wheat exports?

In the past fiscal, India has exported 10 million tonnes of wheat at a time when the international prices were not favourable, and the argument was that the country will get a bountiful harvest in 2013 thereby creating more problem for food stocking. Against 82.3 million tonnes stocks (wheat and rice) on June 1, 2012, the Ministry of Food & Consumer Affairs was anticipating stocks to touch an all-time high of 90 million tonnes by June 1, 2013.

No comments: