More than 30% rise in wheat procurement from farmers in the ongoing procurement season (April-June), in comparison to last year, has ensured that the Food Corporation of India (FCI) and state government owned agencies have more grain stocks than the buffer stocks norms. Higher grains stocks consisting of rice and wheat stocks by FCI lead to rise in procurement, storage and transportation costs that is reflected in the Centre’s food subsidy bill.
As on June 1, FCI had rice and wheat stocks of 55.54 million tonne (MT) against the buffer norm of 41.12 MT for July 1. In a year ago period, FCI’s grain stocks were reported at 53.42 MT. According to the latest data, in the ongoing rabi marketing season (2017-18), FCI and state agencies so far have purchased more than 30.06 MT of wheat from farmers while only 23 MT purchased a year ago. FCI at present has a wheat stock of 33.4 MT against the norm of 24.58 MT for July 1.
Official sources told FE that higher grain stocks would ensure that enough volume of grain is available under Open Market Sale Scheme for bulk purchasers later.
In case of rice, the stock at the start of the month was more than 22 MT which does not include 6.7 MT of rice yet to be received from millers. This is higher than the prescribed buffer stocks norm (including strategic reserve norm) of 11.5 MT for July 1. The rice procurement for the next marketing season (2017-18) would commence from October 1.
However, the volume of grain stocks held with FCI at the start of the month has been lowest in comparison to last couple of years with the exception of last year. From 80.5 MT of grain stocks with FCI on July 1, 2012, the volume of stocks has come down by more than 45% to more than 55 MT at the start of this month.
While in case of wheat, the FCI has been offering excess wheat stocks to bulk private purchasers through Open Market Sale Scheme (OMSS), the sale of rice under OMSS has not got encouraging response in last few years. In 2015-16, FCI could sell more than 7.7 MT of wheat under OMSS to bulk buyers while in the last fiscal more than 4.6 MT had been sold.However in case of OMSS (rice), the corporation could sell only a small quantity of grain to bulk purchasers from its excess stocks in FY17.
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A high-level committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar in its report submitted in January 2015 had observed that “during the last five years, on an average, buffer stocks with FCI have been more than double the buffer stocking norms, costing the nation thousands of crores of rupees loss without any worthwhile purpose being served”.