With India's foodgrain stock nearing the minimum buffer limit and concerns that the Open Market Sale Scheme (OMSS) might not fulfill private traders' demand, there's an anticipation of increased private sector participation in wheat procurement this season. The traditional dominance of government agencies in wheat purchases from mandis, accounting for over 95% of the stock, is expected to shift as private buyers are poised to engage more actively due to insufficient government stock. Punjab's Secretary of Food and Supplies predicts private wheat purchases could rise significantly, with field reports indicating major food companies' intent to procure large quantities directly from mandis.
Agricultural prospects indicate a bumper wheat harvest this year, which contrasts with the previous two years of reduced yields that have depleted the Central pool's wheat reserves to 9.7 million tonnes by March. This expected abundant yield is prompting private entities, including big food processing units, to secure wheat directly from producers, offering prices slightly above the government's Minimum Support Price (MSP). This shift is anticipated to provide farmers with marginally higher earnings per quintal, reflecting the private sector's growing role in the wheat market.
The rise in private wheat procurement is influenced by the disparity in state taxation on wheat purchases, with stakeholders advocating for uniform tax rates across states to encourage more equitable procurement practices. Punjab's higher tax rates have previously deterred private purchases, but the current low national wheat stock and potential inadequacy of the OMSS to meet demand are driving private mills to consider buying from local mandis despite the tax burden.