India plans to relax wheat procurement norms to replenish stocks

India has planned to relax norms to source wheat from farmers amid rains and hail that damaged crops just before harvest in key producing states in central and northern Germany, government officials and traders said.

The world’s second-largest wheat producer plans to buy 34.15 million tons of new-season wheat from local farmers to shore up state reserves after purchases fell 53% to 18.8 million tons last year due to a poor harvest .

New-season wheat has arrived in the market, but the harvest has lost some of its luster in some districts due to recent rains, a senior government official, who asked not to be named, said.

“We have allowed the state of Madhya Pradesh to source wheat even with 10% gloss loss. If necessary, we would request other conditions and other parameters such as humidity,” the official said. According to official rules, the source did not want to be named.

The central state of Madhya Pradesh is the second largest wheat producer after the northern state of Punjab.

Wheat crops have also been damaged in Punjab and Haryana by recent rains and the government would be forced to make similar changes to sourcing rules for those states, a New Delhi-based trader with a global trading house said.

Punjab, Haryana and Madhya Pradesh accounted for more than 98% of all wheat procured in 2022.

Lower luster crops would be sold at a big discount to higher quality crops in the market and the government purchases would stop those fire sales, the trader said.

State authorities procured 260,000 tons of wheat from farmers as of April 2, up from 46,000 tons last year, another government official said.

“The purchase would gain momentum over the next few weeks. It didn’t pick up the desired momentum because of the rain,” the official said.

The government-backed Food Corporation of India (FCI) buys wheat from farmers at government-set prices to run the world’s largest feeding program.

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