The Food Corporation of India’s (FCI) rice stocks have been growing steadily in the last few years, mainly because of the lukewarm response to the corporation’s Open Market Sale Scheme (OMSS) and its inability to export the excess grain because of World Trade Organisation (WTO) constraints. On July 1, 2017, the corporation had rice stocks in excess of 21 million tonne (MT) against the buffer stocks requirement of 13.5 MT besides around 5.4 MT of grain is yet to be received from the millers. With the new procurement season for 2017-18 (October-September) is to begin within two months, the corporation is holding on to huge stocks which would push up the Centre’s food subsidy expenses. According to an official, the weekly sales under OMSS have few takers as rice grown all across the country unlike in case of wheat. “The export of excess stocks of rice is ruled out as WTO has already raised objections on subsidised grain being shipped out of the country few years ago,” an official told FE.
This leaves FCI with little scope of selling excess stocks under OMSS prior to the commencement of new procurement season. In the ongoing (2016-17) procurement season (Oct-Sept), FCI in collaboration with state agencies has purchased more than 38.5 MT of rice from farmers against 34.2 MT procured in the previous year (2015-16). During FY17, FCI had allocated 30.35 MT rice to states for implementation of National Food Security Act while the offtake was around 29.29 MT, thus leaving out the rest of the stocks as excess.
Meanwhile, FCI has fixed the base price of Rs 2,500 per quintal (excluding local grain purchase taxes) for raw rice of grade-A quality under OMSS for bulk buyers for current fiscal. The FCI has incurred Rs 3,191.64 per quintal as economic costs (includes procurement, storage and transportation) in FY17. As the excess stocks rise, FCI has worked out the economic cost of rice for 2017-18 at Rs 3,264.23 per quintal. The corporation has been able to reduce wheat stocks through OMSS as the grain is grown largely only in Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan. In case of OMSS for rice, bulk buyers have not shown much interest as because of ample local supplies.
The Comptroller and Auditor General (CAG), in its report last week, had stated that due to non-settlement of entire expenses of FCI by finance ministry over the years, the corporation has paid more than Rs 42,000 crore between 2011-12 and 2016-17 as interest on the loans availed by the corporation. “Excess holding of grain stocks also pushe up our (FCI)’ expenses,” an official said. FCI mostly procures around 55-60 MT of rice and wheat annually from farmers and around 50-55 MT is supplied to states for implementation of NFSA.