After a slow start, the government’s move to sell excess wheat stock under the Open Market Sale Scheme (OMSS) to private players seems to have picked momentum in the last six weeks or so.
However, the total open market wheat sale for the current fiscal would still fall sharply against the target of 10 million tonne.
Sources told FE that the Food Corporation of India (FCI) has sold more than 3.2 million tonne of wheat under the OMSS till Friday and is aiming at selling around 5 million tonne of wheat stock in the open market by March 15, when OMSS comes to an end.
The corporation has realised more than Rs 5,000 crore while selling 3 million tonne of wheat in the open market to bulk buyers such
as flour millers and food companies.
In 2013-14, the FCI sold 5.8 million tonne of wheat through open market sale. The corporation had realised an average price of more than Rs 1,604 per quintal for the wheat sold to private traders from the total sale earning of Rs 9,310 crore.
In the latest weekly tender opened on Thursday, the FCI approved sale of 2.68 lakh tonne of wheat under the OMSS. “As the demand for wheat has been rising steadily in the last few weeks, we could exceed 5 million tonne sale under OMSS in the current fiscal,” an official said.
However, the FCI still had more than 25 million tonne of wheat stock at the start of January, far in excess of the buffer stock and strategic reserve norms of 11.2 million tonne for the month.
The wheat stock held with FCI is set to increase further as procurement operations for the rabi marketing season (2015-16) would begin from April 1.
The high level committee (HLC) on restructuring of FCI has recently suggested allowing the corporation flexibility in operating the open market sale because, at present, the Union Cabinet decides on the quantum of grain to be made available under OMSS — which is often timing consuming.
“A transparent liquidation policy is the need of hour, which should automatically kick-in when the FCI is faced with surplus stock,” the panel chaired by former food minister Shanta Kumar has recommended to the government.
The FCI conducts weekly auctions to sell wheat in the open market using commodity bourse NCDEX. The government has set a reserve price of Rs 1,500 per quintal plus freight cost to consuming locations.
Besides, buyers have to pay 5% extra on the base price for last year’s wheat crop (2014-15 season) whose procurement by government agencies ended in June 2014.
“The government should have sold the grain below the minimum support price to attract private players,” Adi Narayan Gupta, a flour miller from Uttar Pradesh and former president of Roller Flour Millers Federation of India said.