FCI’s wheat stocks plunge to 14-year low | The Financial Express

FCI’s wheat stocks plunge to 14-year low

Rice stocks still comfortable, could dip sharply if free ration scheme is extended beyond September.

FCI’s wheat stocks plunge to 14-year low
Meanwhile, the food ministry has allowed states to lift foodgrains for distribution under PMGKAY for this month till September 30. (File Image: IE)

Wheat stocks in the central pool held by the Food Corporation of India (FCI) and state agencies dipped to 25 million tonne (mt) at the beginning of this month, the lowest level since 2008.

According to estimates, by October 1, the wheat stock is expected to be around 22. 9 mt against the buffer norm of 20.5 mt. However, rice stocks as on September 1, 2022, with the FCI were a comfortable 24.65 mt. Rice stock could fall to 20 mt by October 1, still nearly double the buffer requirement of 10.2 mt. Current stocks exclude more than 12 mt of rice yet to be received from millers.

While the government is yet to take a decision on extending Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) beyond September 30, the cumulative foodgrain stocks at the beginning of this month was 49.65 mt against buffer stock norm of 30.7 mt for October 1.

Also Read | Banking system healthy enough to withstand external headwinds: RBI Governor Shaktikanta Das

Official sources told FE that the government is closely watching the grain stock position and condition of kharif sown paddy crops before taking a call in extending the free ration scheme.

In July, FE had reported that rice stocks in the central pool are likely to plunge below the buffer norm by 2.2 mt or 16%, if PMGKAY is extended to the whole of the second half of the current financial year.

Launched in April 2020 as part of the Covid-19 relief measures, 5 kg of grains are distributed free under PMGKAY to more than 800 million beneficiaries every month free of cost. Additionally, these people also get an equal quantity of highly subsidised foodgrains under the National Food Security Act (NFSA).

Meanwhile, the food ministry has allowed states to lift foodgrains for distribution under PMGKAY for this month till September 30 against earlier directive of grain lifting to be completed by August 31.

A food ministry official told FE that depletion in wheat stock attributed to a more than 56% drop in procurement in the current rabi season to only 18.8 mt against 43 mt purchased by FCI and agencies in the 2021-22 season (April-June) because of lower production and the free ration scheme being implemented since May 2020.

Wheat output in the 2021-22 crop year (July-June), as per the agriculture ministry, has declined by around 3% on year to 106.8 MT because of heat waves during the flowering stage of the crop in March.

Last week, the government had set a marginally higher target of 51.8 mt of kharif rice procurement for 2022-23 season (October-September) by the FCI and state agencies against the actual procurement in previous year despite the possibility of drop in output because of lower paddy-sowing. Kharif rice procurement was 50.9 mt in 2021-22 season.

Also Read | IEX total trade volume dips 18 pc to 7,805 mn units in August

Overall paddy sowing area across the country was reported at 38.3 million hectare (mh) which was 5.6% less than year ago because deficiency in the monsoon rainfall in Uttar Pradesh, Bihar, Jharkhand and West Bengal.

The government has purchased more than 59 mt of rice in the 2021-22 season (October-September) so far and overall procurement in the season is likely to be 60 mt. In the previous year, rice procurement was a record 60 mt.

The government had revised the norms for PMGKAY in May by allocating around 11 mt of rice while reducing wheat allocation by the same quantity.

The economic cost of foodgrain procurement by the FCI, which includes expenses such as minimum support price payment to farmers, procurement, acquisition and distribution costs, etc, for rice and wheat are estimated at 3,670 and2,588 per quintal, respectively, for 2022-23.

The government distributes rice and wheat to beneficiaries under NFSA at Rs 3 and 2 per kg, respectively.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

9 Photos
AAP sweeps away 15 year BJP reign in MCD election – Photos from celebrations
14 Photos
G20 Presidency: Rare Photos from all-party meet, chaired by PM Modi
11 Photos
‘The festival of democracy’ – Modi votes in Gujarat 2nd phase! See PHOTOS