Wheat Auctions Fail to Reduce Retail Prices, Government Bars Traders From Participating

The Union government will not allow traders to participate in the next round of wheat e-auction scheduled for July 19 after learning that its open market sale policy has not resulted in reduction of sale prices, the Hindu reported. The scheme, which was started with the objective of controlling food prices, has only helped middlemen make a profit, the report said.

The quantity offered for sale has also been reduced by 56% from 4.18 lakh tonnes in the last round to 1.83 lakh tonnes now.

On June 12, food secretary Sanjeev Chopra had announced the plan to sell 15 lakh tonnes of wheat from the central pool stock in the first phase and said that it would be raised further if required, the Hindu reported.

The open market scheme’s main objective is to increase the availability of grains and reduce its retail price. While the quantity of wheat sold in each round increased, prices did not fall.

The wheat offtake was 21% in the first round and 42% in the third round of auction, the report said. However, according to data maintained by the consumer affairs ministry, the all-India average retail price of wheat increased from Rs 31.27/kg in May to Rs 31.67/kg in June and the average price in July has further shot up to Rs 31.99/kg. Similarly, atta prices were Rs 36.42/kg in May, Rs 36.95/kg in June and Rs 37.16/kg during July 1-14.

“The change in the guidelines was necessitated after the results of the third round showed an increase in average rate despite the claim of allowing actual users’ participation through the capping clause at 100 tonnes. Unless the government addresses the basic issue of higher physical availability in the market more realistically, and not through policing methods like stock limit, the prices may not be contained,” an industry expert told the Hindu.

The average sold out price in the e-auctions also rose from Rs 2,136 and Rs 2,137 per quintal in the first two rounds to Rs 2,150/quintal in the third.

Interestingly, the highest selling rate of Rs 2,245/quintal was reported from Uttarakhand, which is a wheat growing state, the report said. Even at Rs2,170/quintal in Uttar Pradesh and Rs 2,189/quintal in Rajasthan, the rates were on the higher side when compared to rice consuming states like Kerala, Karnataka or Tamil Nadu, the newspaper reported.

Yadav Foods has offered to buy at Rs 2,285/quintal from the Food Corporation of India’s (FCI) Haldwani depot in Uttarakhand, which is the highest rate among all the states, trade sources told the Hindu. In Delhi, as many as 65 out of 90 successful participants offered to buy wheat at Rs 2,200/quintal or more.

However, Uttarakhand’s allocation in the fourth round has been reduced by half compared to its offtake in the last round, whereas the same quantity has been maintained in Delhi, the report said.

This article has been republished from The Wire