FCI’s excess wheat sale to private players picks pace

After a sluggish start, the sale of excess wheat stock under Open Market Sale Scheme…

After a sluggish start, the sale of excess wheat stock under Open Market Sale Scheme (OMSS) to private players has picked pace in the few weeks.

Sources told FE the Food Corporation of India (FCI) has sold more than 3 lakh tonne of wheat in each of the last two weekly tenders against only about one lakh tonne of grain sold weekly to bulk buyers such as floor miller and food companies since the launch of OMSS in August 2014.

The corporation has sold more than 2.6 million tonne of wheat under OMSS from its excess stock till now and food ministry officials said the government is expected to sell more than 5 million tonne of wheat by the middle of March, when OMSS comes to an end.

The government had set a target of selling 10 million tonne of wheat under OMSS in the current fiscal.

In 2013-14, the FCI sold 5.8 million tonne of wheat through open market sale. The corporation had realised an average price of more than Rs 1604 per quintal for the wheat sold to private traders from total sale earnings of Rs 9,310 crore.

In the latest weekly tender opened on Thursday, FCI approved sale of 3.16 lakh tonne under OMSS. “As the demand for wheat has been rising steadily in the last few weeks, we could exceed 5 million tonne of wheat sale under OMSS in the current fiscal,” a food ministry official said.

However, the FCI still has more than 27 million tonne of wheat stock at the start of December, far in excess of buffer stock and strategic reserve norms of 11.2 million tone for the January 2015.

The wheat stock held with FCI is set to increase further as procurement operations for the rabi marketing season (2015-16) would begin from April 1.

The FCI conducts a weekly auction to sell wheat in the open market using commodity bourse NCDEX platform. The government has set a reserve price of Rs 1,500 per quintal plus freight cost to consuming locations.

Besides, buyers have to pay 5% extra on the base price for last year’s wheat crop (2014-15 season), the procurement of which by government agencies ended in June, 2014. “The government should have sold the grain below MSP to attract private players,” Adi Narayan Gupta, a flour miller from Uttar Pradesh and former president of Roller Flour Millers Federation of India said.

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