Wheat traders in Punjab bet on profits, but higher yield could upset plans
Chandigarh: Encouraged by profits earned in the previous seasons, private traders are again actively purchasing wheat from Punjab farmers. However, the anticipated bumper yield this season poses a risk of shrinking their profit margins, which are usually generated by stocking and supplying wheat to local flour mills at a higher price over the year.
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As on Friday, traders have bought 6.99 lakh metric tonnes (LMT) (8.42%) of wheat, an increase from the corresponding figure of 3.36 LMT (5.52%) last year. Wheat production in the state was affected by unpredictable weather conditions, in 2022 and 2023 enabling traders to capitalize on market supply needs.
Anil Popli, vice president of the
Punjab Roller Flour Mills
Association, said the flour mills usually turn to the Food Corporation of India (FCI) to buy wheat from time to time, but the production had dipped over the past two years.
This helped the traders sell wheat at a premium and they are expecting a similar trend this season too, he said.
Some farmers have also decided to hold back their stocks. Randhir Singh, a farmer from Patran said, "Wheat was sold for around Rs 3,200 per quintal in the market six months after the procurement. It has prompted farmers to stocker larger stocks in the hope of getting a better deal," he said.
Traditionally, private trade used to shun Punjab for the wheat purchase because of the higher taxation regime of 8.5% imposed for
wheat procurement
.
This includes 3% market fee, 3% rural development cess and 2.5% arhtiyas' commission while most of the other key states impose procurement levies of around 3%.
"It could also be linked to the changing eating habits as people are now consuming more bread and biscuits, for which the flour mills need wheat supplies throughout the year. They don't have the logistics to hold such large stocks and rely on traders," said Gagandeep Singh, an arhtiya from Patiala.
Some millers have also switched over to the local market to meet their demands, instead of buying wheat from Bihar and UP.
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