To curb spike in prices, the government has decided to sell surplus wheat stocks held with the Food Corporation of India (FCI) under the open market sale scheme (OMSS) on a quarterly basis from July.
As per earlier policy, FCI had been selling surplus wheat to bulk buyers such as flour millers and food companies during the lean season (January-March). The government aims at boosting supplies and moderate the prices at regular intervals.
Sources told FE that the quantum of wheat offered under OMSS each quarter will be decided depending on market prices of the commodity.
FCI sold 3.37 million tonne (MT) of wheat to private bulk buyers such as flour millers and food companies during February 1-March 15, 2023 through weekly auctions.
The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.
Retail wheat inflation rose by 19.91% in March 2023, a moderate decline from 25.37% in the previous month.
Food ministry officials had stated that through open market sale, market prices of wheat have declined to close to the minimum support price (MSP) of Rs 2,013/quintal for last season from Rs 3,000/quintal prevailing at the beginning of the year.
With the FCI’s wheat procurement gathering pace in the last couple of weeks because of delayed harvest due to unseasonal rains in parts of key growing areas — Punjab, Haryana and Madhya Pradesh — the wheat stocks are likely to be comfortable after the end of procurement season in June.
Wheat procurement by agencies from farmers has crossed 21.31 MT till Friday since MSP operations began on April 1, up 36% on year.
Also read: Core sector growth slows to 5-month low of 3.6% in March
Major contributors to wheat procurement so far have been Punjab (9.98 MT), Haryana (5.67 MT) and Madhya Pradesh (5.44 MT).
MSP purchases in Uttar Pradesh and Rajasthan have been marginal.
At present, FCI has wheat stock of 26.45 MT.
Under the open market sale policy, the government allows FCI to sell food grains, especially wheat and rice, at predetermined prices in the open market from time to time to bulk consumers and private traders.
The wheat output in the 2021-22 crop year (July-June), as per the agriculture ministry, has declined marginally to 107.7 MT because of heatwaves during the flowering stage of the crop in March. However, trade sources had pegged the wheat output in previous crop year around 99-100 MT.
Also read: Parts of India to see above-normal heatwaves in March: IMD
Due to lower production and higher global demand, FCI’s procurement in the 2022-23 season fell by more than 56.6% to only 18.8 MT against 43.3 MT purchased from the farmers in the previous year.
The agriculture ministry’s estimate of a record wheat harvest of 112.18 MT for the 2022-23 crop year (July-June).