April 23, 2007

India's government wheat purchases at 4.58 million tonnes, down 32.8 percent on-year

Wheat purchases in 2007 by India's federal government from farmers as of Friday (Apr 20) are estimated at 4.5 million tonnes, down 32.8 percent from 6.7 million tonnes a year earlier, a senior government official said.

"Wheat market arrivals and procurement are slow this year as many farmers are resorting to manual harvesting instead of using combine machines," the official told Dow Jones Newswires.

Manual harvesting helps farmers to retain larger volumes of straw to be used as fodder. Fodder prices have firmed up in recent months, giving farmers an additional avenue of income.

He said there is also a possibility of farmers holding back their stocks in anticipation of rise in prices or selling them to private traders at the farm-gate itself at prices higher than the government-set intervention price.

In India, imports of wheat depend on the size of the government's local wheat purchases from farmers. Last year, a shortfall in local procurement led to wheat imports of 5.5 million tonnes by the government.

Government has already decided to import up to 3.0 million tonnes wheat, if needed, to augment local supplies.

The official said market arrivals so far this year are estimated at only 5.95 million tonnes compared with 8.29 million tonnes year earlier.