After a sharp 34% increase in wheat procurement in the ongoing rabi marketing season (2017-18) to 30.8 million tonne compared to last year, the Food Corporation of India (FCI) has commenced its Open Market Sale Scheme (OMSS) for bulk buyers like food companies and flour millers in non-procuring states which excludes Punjab, Haryana, Madhya Pradesh, Uttar Pradesh, Rajasthan and Maharashtra. As the wheat procurement season (April-June) for the current year comes to an end, the corporation would launch OMSS in key procuring states such Punjab, Haryana and Madhya Pradesh from next month onwards. Sources told FE that bulk buyers, including state government agencies, are being offered wheat under OMSS at Rs 1790 per quintal, excluding freight from procuring to non-procuring states in the current fiscal which is a 9% increase from the previous fiscal.
Under OMSS, FCI releases wheat and rice to bulk buyers from time to time for increasing domestic supplies during a lean period, which keeps the prices under check. Although under OMSS bulk buyers participate in weekly auction to buy wheat, FCI still incurs a subsidy as economic cost of procuring and storing wheat is Rs 2408.67 per quintal for the current fiscal.
Sources said that in the first two weekly auctions using the e-commerce platform, more than 70,000 tonne of wheat had been sold, mostly to Jammu and Kashmir and West Bengal governments under OMSS so far. The corporation is aiming at uploading around 5-6 million tonne (MT) to bulk purchasers in the current fiscal. Under OMSS, the state governments are also allowed to participate in the e-auction for OMSS if they require wheat for other social sector programme other than Targeted Public Distribution System.
“OMSS helps us in not only keeping market prices under control especially during peak festive season, it also helps in reducing excess grains stocks,” an official said.
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Because of higher wheat procurement this season, FCI at the start of month had a wheat stock of 33.4 MT against the norm of 24.58 MT for July 1. The corporation allocates around 24 MT of wheat annually for grain required for implementation of National Food Security Act while a portion of grain procured is kept as buffer stocks and excess is sold through OMSS. While in case of wheat, the FCI has been offering excess wheat stocks to bulk private purchasers through 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 last fiscal more than 4.6 MT had been sold. However, in case of OMSS (rice), the corporation could sell only a small quantity of grain to bulk purchasers from its excess stocks in FY17.