Food ministry working on price for release of rice

Written by Sandip Das | New Delhi | Updated: Jun 23 2014, 06:37am hrs
With the government yet to take a call on the modalities for releasing 5 million tonne of rice into market for curbing inflation, the food ministry has started work on the price structure at which the grain would offered to traders through tendering.

Food ministry sources told FE that the Food Corporation of India (FCI) had rice stock of more than 28.2 mt at the start of the month, which is more than the double the requirement under the strategic reserve norm. Therefore, allocating extra grain would not be a problem. However out of total stock, 7.6 mt is still with millers for processing.

We are waiting for the nod from the finance ministry, a food ministry official said. As per food ministrys calculations, the acquisition cost of the common variety of rice for FCI currently stands at R2,410 per quintal which mainly includes the procurement cost (R1,910 per quintal), mandi charges or VAT (R222 per quintal), milling charges (R38 per quintal) and incidentals.

The FCI has calculated the procurement cost (at 67% conversion rate from paddy) on the basis of the minimum support price (MSP) of the common variety at R1,301 per quintal for 2013-14 (Oct-Sept) season. Besides, if freight, handling and storage charges are included, the economic cost of rice works out to be R2,755 per quintal.

We can release rice at the economy cost for which the government has to take a call, a food ministry official said.

The official said while FCI has been releasing wheat under the Open Market Sale Scheme (OMSS) to bulk buyers through tendering from its excess stocks over the last few years, it would be the first time in a decade that the corporation would sell rice in open market.

In 1994-95, FCI had sold a small quantity of rice in the open market with the corporation allocating 1.4 lakh tonne (2012-13) and 2.4 lakh tonne (2013-14) under OMSS (direct) to state governments for retail distribution, which was not lifted by states entirely.

Last week, as part of steps to curb inflation, finance minister Arun Jaitely had announced the release of 5 million tonne of rice into the market. The official press statement said: Keeping in mind the increase in the retail price of rice, it was agreed that government, through the FCI, would

release more supplies to state governments through the Public Distribution System (PDS).

Besides, Jaitley had stated that the government was keeping a close watch on the price movement of 22 commodities, including rice, wheat, pulses, vegetables, salt, sugar, milk and

edible oil.

The government would be releasing additional rice stocks from government warehouses for supplies to the state governments, food minister Ram Vilas Paswan had stated.