Panjab Wheat: Private Purchase Increases, Farmers Hold on to Stocks

In the 2024 wheat harvest season, Panjab’s grain markets have witnessed a surge in the private purchase of wheat, with private players registering a 47% increase compared to the same period last year. Until 1 May, Panjab’s grain markets received 10.9MMT of wheat, compared to 11.3MMT in 2023 on the same date. Out of this, 10.7MMT has been already purchased — 10.1 MMT by government agencies, and 0.6MMT by private players like flour millers and flour processors. Last year, private purchases stood at 0.4MMMT on 1 May 2023. There are about 70 roller flour mills in Panjab, with a daily processing capacity of 6,400 tonnes of wheat (although they operate at around 50% capacity). This translates to an annual processing capacity of approximately 1.2MMT. Millers primarily focus on supplying wheat flour, granulated wheat and refined wheat flour within the state and to other states. According to the Punjab Market Board (PMB), Panjab millers procure only 25-30% of wheat from within the state. The remaining 70-75% are procured from the Food Corporation of India’s (FCI’s) e-auction under its Open Market Sale Scheme (OMSS), and other states such as Uttar Pradesh and Rajasthan, which supply wheat at a cheaper rate than the FCI. Last fiscal FCI undertook the sale of a record 100 lakh tonnes of wheat and reduced its borrowings by $2.5B. For FCI lower borrowings translated into an annual interest saving of around $45M. However, anticipating an increase in wheat prices, farmers are holding on to wheat stocks more than their requirement for sowing in the upcoming season and for their personal use. Due to the ongoing Russia-Ukraine war, global wheat supplies are hit, leading to stress on Indian markets (SDW Vol. 2 Issue 17, Story 4).