Flour millers seek 23% cut in wheat price under open market sale scheme

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Published: July 3, 2020 7:11 AM

As per weather reports, kharif 2020 is going to be normal and next rabi crop also may be bumper. So, the storage gap will eventually widen.

Wheat has to be milled for consumption.Wheat has to be milled for consumption.

Flour millers have demanded the current wheat price under the open market sale scheme (OMSS) be cut by 23% and also have assured the government that they will lift 10 million tonne from the
official stock.

A decrease in the reserve price may help the government to reduce the stockpiles of the cereal with the Food Corporation of India, which is double than the buffer norm of 27.6 million tonne as on July 1.

After the lockdown was announced, the Centre had reduced the reserve price of wheat at Rs 2,135/quintal and allowed direct sales from district level FCI depots. This helped it to sell 0.57 million tonne while the target is to sell 1.5 million tonne in the entire fiscal. The wheat stock with FCI as on June 30 was over 55 million tonne.

“Less than 13% of free grain alloted for PM Garib Kalyan Ann Yojana was wheat. Rice is clearly the preferred option. Demand of wheat will continue to remain subdued in the PDS channel even for the next five months,” said Sanjay Puri, president of Roller Flour Millers Federation of India.

The only way for the government to liquidate the stock is to reduce the price by at least Rs 5/kg to bring them close to international prices so that value added wheat products can become viable for export, Puri told FE.

Wheat has to be milled for consumption. This is difficult during the pandemic as most small Chakkis are mostly inoperative and consumer is unable to utilise wheat alloted. Less than 13% of free grain alloted for PM Garib Kalyan Ann Yojana was wheat.

Rice is clearly the preffered option for consumer. The alloted wheat is mostly being diverted from PDS to market channels as it is not picked up by the consumers. Demand of wheat will continue to remain subdued in the PDS channel even for the next five months. The only way for Govt to liquidate the Wheat stocks is to reduce the price by atleast Rs 5/ Kg to bring them close to prevailing international prices so that value added wheat products can become viable for export.

The annual allocation of wheat under the National Food Security Act and other welfare measures is 26.4 million tonne and another 4 million tonne can be offloaded for the PMGKAY scheme taking the total to around 30 million tonne for this fiscal. The wheat procurement this year itself was a record 39 million tonne, leaving a surplus of 9 million tonne.

As per weather reports, kharif 2020 is going to be normal and next rabi crop also may be bumper. So, the storage gap will eventually widen and storage crunch may affect crop storage losses or less storage gain, increased costs of fumigation, damages, Puri said in a representation to the food ministry.

“If OMSS reserve rate is reduced by Rs 500/quintal for wheat, it will improve lifting by at least 10 million tonne and market dynamics will give a better rate to the consumer,” he said. Though the industry body has estimated that the government will save Rs 8,500 crore as carrying costs by liquidating 10 million tonne of wheat, but it will be definitely more than an estimated revenue loss of Rs 5,000 crore if OMSS rate is reduced.

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