FCI gets breather as grain stocks decline to 41 mt

Written by Sandip Das | New Delhi | Updated: Feb 12 2014, 09:34am hrs
For the first time in many years, foodgrain stocks with government-run agencies (like Food Corporation of India) and state government-owned bodies have declined to as low as 41 million tonne (mt) at the beginning of February.

The fall is expected to ease the acute storage crunch faced by agencies temporarily, till wheat procurement for the 2014-15 marketing season begins on April 1.

Due to the governments open-ended procurement policy for rice and wheat, the agencies were buying huge stocks from farmers in key mandis, due to which the grain stock used to hover in the 50- 55 mt range in the last couple of years.

Latest data indicate FCI had 24.2 mt of wheat and 16.9 mt of rice at the start of the month. Although grain stocks have fallen, the current stock far exceeds the strategic reserve and buffer stock of 25 mt.

Lower wheat procurement last year, an encouraging response to sale of excess wheat and global demand have ensured that we have some storage space for stocks of kharif rice and the forthcoming rabi wheat, an FCI official told FE.

At present, the agencies are procuring kharif rice they have purchased more than 23 mt from farmers for 2013-14 so far while the target is to purchase 34 mt rice by September, 2014.

The official said that as rabi wheat is expected to arrive in mandis by April 2014, FCI must sell the chunk of

its wheat stock before that, apart from exporting 2 mt

of grain.

Due to a rise in private purchases by farmers, FCI could procure only about 25 mt during the 2013-14 marketing season against the target of 33 mt.

We expect a big rabi wheat crop, attributable mainly to conducive weather conditions, which had led to higher sowing, another FCI official said.

Government-owned agencies buy grain from farmers for distribution under the targeted public distribution system (TPDS) and for maintaining buffer stock and strategic reserve norms. Around 3-4 million tonne rice and wheat are distributed to states every month under TPDS. The corporation also keeps grain for distribution to the armed forces.

State-owned agencies have a total storage capacity of about 61 million tonne. This includes 18 mt of cover and plinth (CAP) capacity, where grains can't be stored for long periods.

Although the Centre needs 60-61 mt of grain annually for the implementation of the National Food Security Act, 2013, a complete rollout is yet to begin in most states.