Punjab's wheat output is unlikely to find many private buyers during the ongoing rabi season due to the high cost of lifting caused by "excessive" taxes and availability of the crop at lower rates in Uttar Pradesh.

"The entire wheat crop is expected to be bought by government-run agencies, including FCI, this year, as traders will not purchase the crop from the mandis of Punjab because of the high cost involved in its procuring from here," wheat traders said.

Traders said the high taxation rate imposed on procurement of wheat from the state was responsible for the situation. "To buy crop from Punjab, one has to pay close to 13 per cent as taxes like VAT, market fee, commission and cess, compared with 7.5 per cent in Uttar Pradesh, which makes buying the crop unviable for traders here," Khanna-based trader Raj Sood pointed out.

According to traders, buying wheat from UP will cost Rs 1,100 a quintal, including taxes plus transportation expenses, at present. However, the actual cost of buying from Punjab stands at Rs 1,300 a quintal, including taxes and transportation.

"Why will traders buy crop from Punjab when there is a difference of Rs 200 a quintal between buying from Punjab and UP," traders reasoned.

Punjab-based flourmill owners, who faced a scarcity of wheat last year for processing activities, have also decided to lift their crop requirement from UP. "We will procure crop from UP as it is quite cheap to buy from there in comparison to buying from Punjab," Punjab Roller Flour Mill Association president Naresh Ghai said on Thursday.

Explaining the rationale behind the decision, Ghai said, "If we do not buy crop from UP at cheaper rates, there could be a huge inflow of wheat-based products like flour from other states at much lower rates, which will hit the local flour mill industry here."

The flourmill industry has asked the Centre to continue the delivery of wheat through the Open Market Sales Scheme throughout the year so as to cater to requirement of flourmills.

Over the past few years, the share of private traders in total buying of wheat crop in Punjab has been on a decline.

From 11.44 lakh metric tonnes in 2006-07, the share of private traders in wheat lifting shrunk to just 22,921 MT in 2009-10.

This year, the Punjab state government and FCI will lift 115 lakh metric tonnes of wheat for the central pool.