Tepid response to open market sale of rice persists
By Sandip Das
The Food Corporation of India on Wednesday received bids for 0.17 million tonne (MT) of wheat to be sold to bulk buyers including flour millers and food companies against 0.41 MT offered in its third weekly e-auction held under the open market sale scheme (OMSS)
However, the corporation received lukewarm response in the second e-auction for sale of 0.36 MT of rice with bidders offered to purchase only 290 tonne of grain.
“The wheat saw an increase of 38 % increase in sale whereas there was an increase of 70 % sale of rice as compared to last e-auction,” according to a FCI statement.
In the first three weekly e-auctions of wheat held so far, the corporation has sold 0.38 MT of wheat in the open market.
Sources told FE that the average bid for the fair and average quality of wheat was Rs 2,156.67/quintal which was marginally above the reserve price of Rs 2150/quital. The Minimum Support Price (MSP) for wheat in the current season is Rs 2125/quintal.
Average bid price for rice under OMSS this week was Rs. 3110.07/quintal against the reserve price of Rs. 3110.07/quintal.
Under the OMSS, the government has decided to offload 1.5 MT of wheat from the central pool to flour millers, private traders, bulk buyers and manufacturers of wheat products till March 2024 to check prices.
Officials said that open market sale of rice by FCI for years has not evoked large interest from traders and bulk buyers because of diversified and bumper production of the cereal across the country.
A food ministry official said that the FCI would continue to sell foodgrains from its surplus stocks till inflationary trend in cereals prices are curbed. The official said current grain stocks are above the buffer and sufficient to carry out open market sales.
As per earlier policy, FCI had been selling surplus wheat to bulk buyers during the lean season (January-March).
FCI sold 3.37 MT of wheat under OMSS during February 1-March 15, 2023 through weekly auctions. The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.
The wheat stock with FCI as on July 11 was 29.71 MT while the government needs 18.4 MT annually for the implementation of the National Food Security Act (NFSA). Buffer for wheat for July 1 is 27.58 MT.
FCI currently has 25.66 MT of rice, which excludes 14.93 MT of rice yet to be receivable from millers at the beginning of this month. The rice stock is against the buffer of 13.54 MT for July 1.
The corporation needs 36 MT of rice annually for allocation under NFSA. The new procurement season (20223-24) for paddy begins on October 1.
Officials said that the government is discussing several options including reducing import duty on wheat from the current level of 40% to control domestic prices.
The government had imposed stock holding limits on wheat for the first time since 2008, for traders, wholesalers and retailers till March 31, 2024 last month to control increase in prices.
This article has been republished from The Financial Express