Changing Landscape of Wheat Procurement: Surge in Private Buying in Punjab

06-May-2025 10:34 AM

Changing Landscape of Wheat Procurement: Surge in Private Buying in Punjab
★ The government’s wheat procurement operations, which began on March 10, have shown an unusual trend this season. By May 4, the Centre had procured 11.19 million tonnes of wheat from Punjab — slightly less than the 11.27 million tonnes purchased during the same period last year. This marks the first decline in procurement this season, largely attributed to higher market prices and aggressive private sector participation, a shift influenced by last season's strong demand.
★ Not just Punjab, but several other states are witnessing a change in procurement dynamics. The drop in government purchases is being driven by active buying from private traders and flour millers. In fact, until May 2, procurement in Punjab was actually higher than the same time last year, but a sudden surge in private buying later pushed government figures down.
★ In 2024–25, Punjab witnessed a significant scarcity of wheat, as traders and millers had avoided stocking up early, anticipating large-scale sales by the Food Corporation of India (FCI), similar to the 10 million tonnes sold in 2023–24. However, as the government's weekly tenders proved insufficient to meet milling demand, mills were forced to buy wheat at rates as high as Rs. 3,100 per quintal — well above the reserve price of Rs. 2,300.
★ To stabilize the situation, the government eventually ramped up the quantity of wheat offered for sale in Punjab. Yet, the sharp increase in private buying in a traditionally government-dominated procurement state like Punjab has come as a major surprise.