Free food grain for poor brought wheat prices crashing down, say traders

Traders who stocked wheat between April and June, hoping to earn better income by promoting it later at a profitable worth anticipating a routine scarcity within the later half of the 12 months, at the moment are a apprehensive lot.

To their utter disappointment, the wheat costs are at its lowest stage within the state and in addition within the nation, due to the free distribution of meals grains— the federal government’s welfare intervention below PM Garib Kalyan Yojana to assist the poor take care of the financial fallout of Covid-19 lockdown– that’s believed to have dramatically crashed the demand for wheat and flour (aata) out there, say merchants and officers.

“Our firm purchased around 50,000 quintals of wheat from farmers/agents in April-May at or above the minimum support price (MSP) of Rs 1,925 per quintal, fixed by the government. But today mandi wheat is selling for as low as around Rs 1,500 per quintal,” stated Rajiv Sharma, supervisor of Lahoti Food Products Pvt Ltd in Lucknow’s Kasganj.

According to Sharma, (atta) wheat flour and ‘maida’ (all objective flooring) sellers inventory wheat within the months of April and May since wheat costs at all times soar August onwards attributable to its scarcity after farmers promote their produce on the MSP to the federal government throughout the wheat procurement season between April and June.

“But for the first time this year, wheat prices started dropping after July and reached its lowest level by September-October. Since the wheat prices are low, the price of ‘aata’ and ‘maida’ is also low in the same proportion, causing losses to the company,” Sharma defined.

He stated the wheat worth in October final 12 months was round Rs 2,000 per quintal which was above the MSP of Rs 1,840 per quintal.

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Rajendra Gupta, a distinguished grain service provider in Lucknow, stated that merchants who had bought shares of wheat instantly after the harvesting to promote it later to prospects, together with flour mills, have been in serious trouble this time because the low demand had introduced the costs down considerably.

Expressing an analogous opinion, Pandey Ganj (Lucknow) Galla Vyapar Mandal chief Satish Kumar Tiwari stated the market demand for wheat had been closely curtailed leading to a pointy worth drop since July. “Few flour-mill owners are buying wheat from us since they do not have customers to purchase flour from them,” he stated.

“Now, most people come to us to get their own wheat grinded instead of buying flour from us,” stated Lakhan Jaiswal, one flour-mill proprietor.

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According to Sharma, Gupta and Tiwari, the demand for wheat and flour began falling from July when the Central authorities began distributing free meals grain to all ration card holders as a reduction measure to mitigate the hardship of Covid-19 lockdown.

“Free government distribution of ration alone is responsible for low demand for wheat and flour and hence the low prices,” Gupta stated, “The situation will change only from December after the free ration distribution scheme ends in November,” he added.

Under the free meals grain distribution scheme, overlaying the state’s greater than 80% inhabitants, every precedence family with a public distribution system (PDS) card will get free 5 kg wheat/rice per head, per thirty days plus one kg ‘chana’ or Bengal Gram per card per thirty days. The Antyodaya households or the poorest households get a hard and fast quota of 35 kg meals grain per card per thirty days whatever the variety of members of the family.

The free distribution is along with the common meals grain they get at a extremely backed worth of Rs three per kg for rice and Rs 2 per kg for wheat per head per thirty days below the National Food Security Act.

“If a family, for example, has five members, then it is getting 50 kg wheat and rice every month and this is more than enough for most families, obviating the need for them to buy wheat or flour from the market,” Sharma stated.

Food and civil provides division extra commissioner (advertising and marketing), AK Singh additionally confirmed that the free distribution of ration did have a bearing in the marketplace demand for wheat and on its worth. “The impact of the free food distribution scheme on the demand and price of wheat products is quite palpable,” he stated.

Sources stated an analogous scenario prevailed in most different states. “In fact, wheat prices are even lower in other states, including Punjab, Haryana, MP, Rajasthan, Gujarat and Maharashtra,” they stated, quoting Agmarknet knowledge.