The government has increased the support price of wheat to Rs 1,000 per quintal but with the rising inflation and global food shortage, the government may find it difficult to compete with the market price, which is well beyond the support price.

Last year, the market price of wheat was Rs 1,200 per quintal, and production stood at 2.54 crore MT. The government agencies could, however, procure only 50,000 MT. Private companies had procured the bulk of this production by offering higher prices. This year, due to unseasonal rains and hailstorm, wheat production is likely to dip by 3 to 5 per cent. Estimates of the Agriculture Department say the production is likely to be around 2.47 crore MT.

Even the government’s desperate measure to ban the licence given to private companies to buy wheat directly from the farmers, is unlikely to help the state meet the required target.

“We are keeping a close watch on the mandis and so far the arrival and the procurement is much better then the procurement during the corresponding period in 2007,” said Jagan Mathew, Principal Secretary, Food and Civil

Supplies. Mathew is hopeful that the state government may meet the required procurement target. “For the Centre, UP is a wheat surplus state and our own requirement for public distribution system is 15 lakh MT per annum. So come what may, we have to meet the target,” he added.

The state government is banking on arhatiyas (commission agents) for the purchase of wheat from the farmers. These agents are paid a commission at the rate of 2.5 per cent. Mehaboob Hasan, chief marketing officer in the Food Department, maintains that “so far the state agencies and NAFED — the Central government agency — have together purchased above two lakh MT of wheat from farmers, although the prevailing market price is little above the support price. The difference can be absorbed by the arhatiya from his commission.”

Information available with the Agriculture Marketing Department shows that the market price of wheat in Saharanpur is Rs 1,060 while Rs 1,120 in Meerut and Agra. In the wheat belt of Sitapur, Lakhimpur, Shahjahanpur, Pilibhit and Bareilly, the market price is just above the support price of Rs 1,000 per quintal. The lowest price is, however, in Lucknow where it is equal to the support price Rs 1,000. With Madhya Pradesh government announcing a bonus of Rs 100 per quintal, Hasan, however, said that there was no such proposal in UP “as of now” for giving bonus to farmers.

The Madhya Pradesh government announced the bonus because the production there had been low this year, he said.