The price of wheat available to retail consumers through the central government’s much-publicised open market sale scheme will be maximum in Kerala and lowest in Punjab and Haryana because of proximity to the delivery centre. According to a data sourced by FE, the transportation cost of wheat to Kerala from Ludhiana would be Rs 179.09 per quintal, while it would be Rs 157.15 for Pondicherry. For Punjab and Haryana the cost would be only Rs 16.28 per quintal

Similarly the freight cost to Karnataka and Tamil Nadu would be Rs 156.20 & Rs 149.47 per quintal respectively. The government-appointed high-powered committee on Open Market Sale Scheme (OMSS) will take a final call shortly on the prices depending upon the viability of the scheme and the interest shown by the states.

Sources said that the high powered committee has worked out two sets of freight cost for the states having rail connectivity to the capital cities and those cities without rail connectivity mostly in the north eastern and hilly states.

Accordingly, the cost of transportation of wheat to Manipur is fixed at Rs 278.34 per quintal, while the freight cost for Tripura would be Rs 241.16 per quintal. The cost was arrived at by adding the cost of rail transportation from Ludhiana to nearest railway station from the state capital plus cost of carrying the consignment by road to state capitals.

On September 3, 2008, the government decided to sale 1 million tonne of wheat in open market through the state governments during September and October. It was decided that wheat would be sold to states at a rate of Rs 1,000 per quintal, plus the transportation of cost or freight from Punjab and Haryana (referred as ex-Ludhinana).

In July 2008, the Cabinet Committee on Economic Affairs (CCEA) had given a green signal for allowing the open market sale of wheat as the state owned Food Corporation of India (FCI) and state government-owned procuring agencies have lifted 22.6 million tonne of wheat, against the target of 15 million tonne during the recently concluded Rabi season.

The open market sale would definitely impact wheat prices across the country. In the wholesale market, wheat is currently selling at Rs 1,100 – Rs 1,200 a quintal in Delhi and Rs 1,500-1,600 a quintal in the southern states.

This allocation of wheat for the open market sale to the states would be over and above the monthly allocation of about 1 million tonne of food grains, which is given to the states for distribution through Public Distribution System (PDS) and to the armed forces.

Earlier, Union agriculture minister Sharad Pawar had said that the government has enough wheat stocks to sell up to 6 million tonne of the food grain in the open market.

He said the government has kept 5.5 million tonne of wheat as buffer stocks against the buffer norm of 4.5 million tonne, besides it has also allocated 3 million tonne as strategic reserve and another 3 million tonne just for the open market sale.