To sell more surplus wheat in the open market, the Food Corporation of India (FCI) has revised its grain stocks norms for the quarters beginning in the month of October and January while rules for July and April have been kept unchanged.
Under the revised norms which includes operational stocks and strategic reserves norms, the corporation needs to have wheat stocks of 19.5 million tonne (MT) and 13.8 MT on October 1 and January 1, respectively.
Under the new norm, FCI needs to hold one MT of less wheat in comparison to the previous norm.
Sources told FE that the corporation follows two norms for keeping buffer stocks — operational stocks and strategic reserve norms. Under the revised norm while operational stocks norms remained unchanged in case of strategic reserve norms, 2 MT of wheat and 3 MT of rice, respectively are required to be maintained which was as per earlier provisions was 3 MT of wheat and 2 MT of rice.
Sources told FE that this change in the norm would allow FCI to sell an additional one MT of the grain through Open Market Sale Scheme (OMSS). This would also ensure extra availability of more grain stocks in the market.
Due to rise in the retail prices in last couple of weeks, the government recently had removed import duty on wheat from the earlier rate of 10%. This was done to boost wheat imports for augmenting domestic supplies till April, 2017 when the new wheat crop starts arriving in the market.
Meanwhile as reported earlier, the wheat stocks held with FCI had plunged to lowest level in the last five years mainly because of liquidation through OMSS for private bulk buyers and lower procurement in 2016-17 marketing season.
As on December 1, FCI had a wheat stock of 16.49 MT, against the buffer stocks norm of 13.8 MT required to be maintained on January 1.
This implies that the corporation would be left with virtually no excess wheat stocks starting next year as it requires around 2.5 MT of grain monthly for Public Distribution System. According to official data, the wheat stocks have declined by close to 49% within a year. As on December 1, 2015, FCI had a wheat stocks of 26.8 MT.
In the current fiscal, FCI has sold 3.6 MT of wheat under OMSS to bulk buyers so far. Sources said that although the corporation has not announced winding up OMSS in the current fiscal, it has virtually little excess stocks to continue to the scheme. In FY16, FCI had sold 7.1 MT of wheat through OMSS while in the 2014-15, the corporation had sold more than 4.2 mt of grain to bulk purchasers.
FCI has been selling wheat under OMSS to bulk buyers at R1,640 per quintal while the economic cost of wheat has been around Rs 2,344 per quintal.