By Mayank Bhardwaj
NEW DELHI (Reuters) – India’s new season wheat purchases from local farmers rose 13.7% from the prior year’s total procurement, further boosting stocks at government granaries that are fast running out of storage space due to more than a decade of bountiful production.
Government-backed Food Corporation of India (FCI), which buys grain from farmers at a state-set guaranteed price, has bought a record 38.83 million tonnes of wheat, a government statement showed. Last year, the FCI procured 34.13 million tonnes of wheat.
“It now looks like that we’ll end up buying 40.5 to 41 million tonnes this year,” said an official who oversees the government’s wheat purchase programme, declining to be identified in line with government policy.
In 2012, the FCI bought a then-record 38.18 million tonnes of wheat, exposing stocks to rot.
The same story may play out this year, experts have said.
A sharp rise in the price the government pays to buy wheat from local farmers has led to bin-bursting harvests since 2007, exacerbating storage problems in the world’s biggest wheat producer after China.
While the annual increase in the guaranteed price has led to overflowing bins, the same policy has pushed Indian wheat prices about $35 a tonne above world market prices, making it almost impossible for India – also the world’s second-biggest wheat consumer – to export the grain.
This year’s domestic wheat output is widely expected to reach 107.18 million tonnes, versus 103.60 million tonnes produced in the previous year.
Private traders have mostly stayed away from buying wheat from farmers due to lockdown measures aimed at stemming the spread of the new coronavirus, forcing the FCI to scoop up record quantities of wheat.
Amit Takkar, chief of brokerage Conifer Commodities, last month told Reuters that if the FCI ends up buying more than 37 to 40 million tonnes of wheat this year, its granaries will overflow by June.
(Reporting by Mayank Bhardwaj; Editing by Christopher Cushing)