1. Despite 22% fall in wheat procurement, FCI stocks higher than buffer norms

Despite 22% fall in wheat procurement, FCI stocks higher than buffer norms

Despite a sharp fall of 22% in wheat procurement from farmers this year, the Food Corporation of India (FCI) continues to hold higher foodgrain stock than the prescribed buffer norms.

By: | Updated: July 22, 2016 7:08 AM
Food minister Ram Vilas Paswan recently stated that FCI has enough stock of foodgrains to meet the requirement of Public Distribution System (PDS) and ensuring strategic reserve despite drought situation which prevailed in the last two years.

Food minister Ram Vilas Paswan recently stated that FCI has enough stock of foodgrains to meet the requirement of Public Distribution System (PDS) and ensuring strategic reserve despite drought situation which prevailed in the last two years.

Despite a sharp fall of 22% in wheat procurement from farmers this year, the Food Corporation of India (FCI) continues to hold higher foodgrain stock than the prescribed buffer norms.

According to latest data, the foodgrains’ stock consisting of rice and wheat with FCI and state government-owned agencies at the start of this month was close to 50 million tonne against the buffer norm of 41.1 MT. Although the grain stocks have dipped by more than 3 MT from June 1 stocks, the higher grain stock at present is attributed to a record rice purchase in excess of 34 MT in the ongoing kharif marketing season (2015-16).

Thanks to a sharp fall in wheat purchase in recently concluded rabi marketing season (2016-17) to 23 MT from 28 MT purchased from farmers a year back, FCI at present has a wheat stock of 30.2 MT against the norm of 27.5 MT for July 1.

In case of rice, the stock at the start of the month was close to 20 MT which does not include 5.2 MT of rice yet to be received from millers. This is against the prescribed buffer stocks norm (including strategic reserve norm) of 13.5 MT for July 1. A food ministry official acknowledged that FCI has excess rice stock while in case of wheat it is close to the norm.

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However, the volume of grain stocks held with FCI at the start of the month has been lowest in comparison to last five years. From 80.5 MT of grain stocks with FCI on July 1, 2012, the volume of stocks has come down by more than 38% to close to 50 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 current fiscal more than 3 lakh tonne has been sold so far.However in case of OMSS (rice), the corporation could sell only a small quantity of grain to bulk purchasers from its excess stocks in FY16.

Food minister Ram Vilas Paswan recently stated that FCI has enough stock of foodgrains to meet the requirement of Public Distribution System (PDS) and ensuring strategic reserve despite drought situation which prevailed in the last two years.

A high-level committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar in its report submitted earlier this year 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”.

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