Poor start for govt plan to sell wheat in open market

Written by Sandip Das | New Delhi | Updated: Oct 8 2014, 09:09am hrs
The government's move to sell excess wheat stock through the Open Market Sale Scheme (OMSS) has begun on a dismal note.

Since August, when the OMSS was launched to upload excess wheat stock held with the Food Corporation of India (FCI) in the market, only 4.6 lakh tonne of grain has been sold to private bulk buyers.

The government is aiming at selling 10 million tonne of wheat from FCI stocks in the open market by March 2015. FCI had wheat stock of more than 35 million tonne at the start of September which is far in excess of buffer norms.

According to FCI officials, demand for wheat from mainly bulk buyers such as flour millers and processors would increase in the next few months because of the festive season. A flour miller from Ghaziabad said private wheat stocks held with traders have been declining steadily, thus demand from wheat under OMSS would see a sharp rise.

Supply situation has improved with the government selling excess foodgrain through bidding, Adi Narayan Gupta, a flour miller from Uttar Pradesh and former president of Roller Flour Millers Federation of India, said.

The FCI conducts a weekly auction through the NCDEX platform to sell wheat in the open market. The government has set a reserve price of R1,500 per quintal plus freight cost to consuming locations.

Besides, buyers have to pay 5% extra on the base price for the new wheat crop (2014-15 season), the procurement of which ended in June.

Meanwhile, wheat prices have been stable across the country in the last few months. As per Agmark data, the market price of wheat in Delhi is around R1,400 per quintal while the grain is being sold in Visakhapatnam at R2,200 per quintal.

In 2013-14, FCI had sold 5.8 million tonne of wheat to bulk buyers while the government had set a target of 8.5 million tonne of grain to be sold under OMSS. The corporation had realised average price of more than R1,604 per quintal for the wheat sold to private traders from the total sell earning of R9,310 crore.

In a bid to fight the inflationary trend, the government last month announced allocation of 5 million tonne of rice as additional allocation to states under the Targeted Public Distribution System.

Under OMSS, around 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 the north-eastern states have been allotted 50,000 tonne of wheat each.