The Food Corporation of India (FCI) is likely to discontinue the Open Market Sale Scheme (OMSS) of wheat effective July, as its grain stocks have fallen sharply because of lower procurement in the current season.
According the official data, the wheat stocks held with FCI is set to fall to less than 28 million tonnes (mt) by July 1, against the buffer stocks norm of 24.5 mt. The corporation also has to keep 3 mt of grain as strategic reserve, thus leaving little for OMSS for bulk buyers.
Against the target of 30 mt, in the ongoing rabi marketing season, FCI and state agencies have purchased only 22.84 mt of wheat so far and the total procurement is not expected to exceed 23 mt. The corporation had an opening wheat stocks of 14.5 mt when procurement this season began in April 1.
“As per our mandate, we have sufficient stocks to meet PDS demand, we have been selling grain under OMSS just to upload excess stocks,” a FCI official told FE. At present, OMSS for wheat for the current fiscal has been operational in the key non-procuring states and only about 1.2 lakh tonne has been sold to private players, mostly in West Bengal, in the current fiscal.
In FY16, FCI had sold wheat in excess of 7 mt to bulk private buyers through weekly auctions.
In FY15, the corporation could sold only 4.2 mt of wheat to bulk buyers. Of the total quantity sold to private purchasers under OMSS last fiscal, more than 3.4 mt have been purchased in Madhya Pradesh and 1.2 mt had been sold in Haryana. Mainly private purchasers from the southern states have used Madhya Pradesh to buy wheat, which is grown mostly in the northern region as a rabi crop.
In Punjab, Haryana and Madhya Pradesh, the reserve price of wheat was fixed at R1,550 per quintal under OMSS.
For depots of FCI located outside these states, the reserve price of wheat was fixed at R1,550 per quintal plus railway freight from Ludhiana to the nearest railhead and road transportation cost from such railhead to the depot.
Officials said that despite selling a record quantity under OMSS, the corporation had to incurred losses as economic cost of procuring and storing wheat is R2,267 per quintal.