Govt closes wheat sale via OMSS

Written by Sandip Das | New Delhi | Updated: Mar 11 2014, 09:29am hrs
The Centre has decided not to sell more wheat stocks through the open market sale scheme (OMSS) after Food Corporation of India (FCI) reported a sale of nearly 5.8 million tonne of grain by floating tenders to bulk buyers.

There would not be any more tenders to sell excess wheat stocks under OMSS, a food ministry official told FE.

Onother hand, the FCI and state government-owned procuring agencies such as Pungrain (Punjab) and MP Civil Supplies Corporations have already started preparations for the wheat procurement drive for new marketing season (2014-15) from April 1.

The government had set a target to sell 8.5 mt of wheat to bulk buyers under OMSS this year. The FCI was holding on far more stock than required. Even at the start of February 2014, FCI had wheat stock of more than 24 mt which is far more under the strategic reserve and buffer stocks norms.

The food ministry official said wheat was being sold by FCI through weekly tender to the private traders with a base price of R1,500 a quintal, along with freight cost to the concerned locations. The corporation has realised average price of more than R1,603 a quintal for the wheat sold to private traders so far.

Although the Cabinet had cleared the sale of excess stock in September 2013, there was a lukewarm response initially to OMSS as the grain was to be sold only at Punjab and Haryana depots. Subsequently, the government decided to allocate grain at state-level depots of FCI.

About 20 key consuming states such as Uttar Pradesh, Madhya Pradesh, Kerala, Tamil Nadu, Karnataka, Odisha, Bihar, West Bengal and Maharashtra were allocated 2 lakh tonne of wheat for sale to bulk buyers. Himachal Pradesh and northeastern states were allotted 50,000 tonne of wheat each under OMSS.

Supply situations have improved in last few months with the government selling excess grain stock through tendering, Adi Narayan Gupta, former president of Roller Flour Millers Federation of India, said.

Experts said the decision to release grain under OMSS would help contain the prices of wheat. As per the Agricultural Marketing Information Network (Agmark) data, wholesale wheat prices were quoted on Monday at R1,665 per quintal in the Ghaziabad market (Uttar Pradesh) and R1,685 a quintal in the Jabalpur market (Madhya Pradesh).

Meanwhile, in anticipation of a bumper wheat crop, the government has raised the procurement target of the key grain at 31 million tonne (mt) for the current 2014-15 marketing season.

Last year, the government had to scale down wheat procurement target from 34 mt to 26 mt, and eventually could purchase only 25 mt of grain.

As per the second advance estimate released last week, the wheat production is likely to be around 95.6 mt in 2013-14 against 93.5 mt the previous year.

The wheat is a winter crops and mainly grown in Punjab, Haryana, Madhya Pradesh, Uttar Pradesh and Rajasthan. The annual domestic consumption of wheat is around 76 mt.