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Does Bakery Units Buy Wheat ?

Above  headline has been  a search term  to arrive at  bakerybazar . Yes  All major bakery companies buy wheat from open market  either  for their  own flour mills or to hedge from any sudden rise in price .

This has been the strategy for bigger bakery units  to lower their prices  . Procurement cell of these companies keep their men in the  commodities market and with arrival of  wheat they  do the negotiations  and buy bulk wheat  which then can be transported to own storage or to be stored at  flour mills and these mills can be paid  only  conversion or milling charges .Miller take orders to fill in their idle capacities .

Second option is to have contract farming where companies enters into contract  with farmers for certain volume of wheat at  a price lower than the market price and buy that wheat after the cultivation . Farmer are also willing as they get bulk order at good price from any government minimum price  .



Many advantages  of this strategy .

  • Reduce cost of flour
  • Sure of quality of flour
  • No Middlemen   hence  reduces cost
  • Can sell excess wheat when  prices are high

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