1. FCI still bogged down by excess buffer stocks of rice, wheat

FCI still bogged down by excess buffer stocks of rice, wheat

On June 1, food grain stocks with the Food Corporation of India usually reach the year’s peak.

By: | New Delhi | Updated: June 10, 2015 1:12 AM

On June 1, food grain stocks with the Food Corporation of India (FCI) usually reach the year’s peak. This year too they had, but the stocks were still at their lowest level compared to the corresponding periods in the last five years.

The FCI had more than 61.8 million tonne  (mt) of grains on June 1,   mostly consisting of rice and wheat. This was still way above strategic reserve norm of 41.1 mt. The FCI’s grain stocks have dropped to the current level from the record high of 82.4 mt  reported in June  2012.

After FCI  virtually winded up wheat procurement drive for the current marketing season by purchasing more than 27 mt from the farmers in the last two months or so, the stock levels have gone up to more than 40 mt at the start of this month, though as per buffer norms, it should have a wheat stock of 27.5 mt on
July 1.

Sources told FE that while the government has continued with the Open Market Sale Scheme  (OMSS) for wheat in non-procuring states after April 1,  the response has not been encouraging so far. Only 14,300 tonne of wheat has been sold to bulk buyers under OMSS through weekly auctions since April 2015.

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In the case of rice,  the government agency has stock of 22.6 mt of grain which included rice yet to be received from miller. The buffer stocks norm for July 1  prescribes a rice of stock of 13.5 mt.

For the first time since the government launched open market sale of rice in April, only  7,300 tonne of rice has been purchased by grian traders and bulk buyers so far.

The High-Level Committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar in its report earlier this year had observed ‘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.”

HLC had stated that the current system is extremely ad-hoc, slow and expensive. “A transparent liquidation policy is the need of hour, which should automatically kick in when FCI is faced with surplus stocks than buffer norms.

Greater flexibility to FCI with business orientation to operate in OMSS and export markets is needed,” the committee had observed in its report.

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