OMSS picks pace, govt sells 3.8 mt of wheat to bulk buyers

Written by Sandip Das | New Delhi | Updated: Jan 30 2014, 10:41am hrs
Two months before the beginning of wheat procurement by government agencies for the 2014-15 season, private bulk buyers have stepped up their purchase activities under the Open Market Sale Scheme (OMSS) of the Food Corporation of India (FCI) for selling excess stock.

As per latest data, since the launch of OMSS in September, bulk buyers such as flour millers have purchased more than 3.8 million tonne (mt) of wheat from FCI till now. Out of total amount sold, more than 1.4 mt was cleared this month.

An FCI official said in the next two months more than 3 mt of wheat would be sold to bulk buyers after which OMSS would come to an end.

The demand for wheat under OMSS has picked up since December, we expect to sell as much wheat as possible in the open market, the FCI official told FE.

The government is aiming to sell 8.5 mt of excess stock to bulk buyers by end of March.

However, food ministry sources said the government would manage to offload about 7 mt of its stock by end of this fiscal.

At the start of the month, the FCI had stock in excess of 28 mt, which is far above the strategic reserve and buffer stock norms. The wheat sold through OMSS and exports would help the corporation create storage space for the new wheat procurement season, which would commence on April 1 in Punjab, Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh.

Wheat is being sold by FCI through weekly tender to the private traders with a base price of Rs 1,500 a quintal along with freight cost to the concerned locations. The corporation has realised average price of more than Rs 1,603 a quintal for the wheat sold to private traders till now.

Although the Cabinet cleared sale of excess stocks in September, there was lukewarm response to OMSS because the grain was to be sold only at Punjab and Haryana depots. Subsequently, the government decided to allocate grains at state level depots of FCI.

About 20 key consuming states such as Uttar Pradesh, Madhya Pradesh, Kerala, Tamil Nadu, Karnataka, Orissa, Bihar, West Bengal and Maharashtra have been allocated 2 lakh tonne of wheat for sale to bulk buyers.

Himachal Pradesh and northeastern states have been allotted 50,000 tonne of wheat each under OMSS.

Supply situations have improved with the government selling excess grain stocks through bidding, Adi Narayan Gupta, a flour miller from UP and former president of Roller Flour Millers Federation of India said.

Experts said the decision to release grains under OMSS would help contain the prices of wheat. As per the Agricultural Marketing Information Network (Agmark) data, wholesale wheat prices were quoted on Wednesday at Rs 1,600 per quintal in Khanna market (Punjab) and Rs 2,500 a quintal in the Bangalore market.