After a sluggish start, the government’s move to sell excess wheat stock in the open market has picked up momentum in the last couple of weeks.
The Food Corporation of India has managed to sell more than one lakh tonne of wheat to private bulk buyers through weekly auction under Open Market Sale Scheme (OMSS) till last week this fiscal.
“We have sold more than 66,000 tonne of wheat under OMSS in the last two weeks and the demand for wheat from bulk buyers is expected to rise in coming months,” a food ministry official told FE.
With huge wheat stocks held by FCI, the food ministry had given its nod to commence OMSS just after the procurement season got over on June 30 in key procuring states of Punjab and Haryana.
Earlier the response under OMSS was lukewarm and FCI had sold only 15,000 tonne of wheat since April 1.
Usually FCI runs OMSS operations during September-March period.
According food ministry officials, the FCI is targeting to sell at least 6 million tonne of wheat under OMSS in 2015-16. The state-run agency had sold 4.2 million tonne of wheat under the scheme in the previous fiscal.
According to the latest data, FCI had a grain stock of 38.6 million tonne on July 1 while the buffer norm stipulates only 27.5 million tonne of grain to be held with the government agencies.
The FCI conducts a weekly auction to sell wheat in the open market using the platform of commodity bourse NCDEX. The government has set a reserve price of R1,500 per quintal plus freight cost to consuming locations.
The High-Level Committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar in its report earlier this year had observed that “during the last five years, on an average, buffer stocks with FCI have been more than double the buffer stocking norms costing the nation thousands of crores of rupees loss without any worthwhile purpose being served.”
HLC had stated that the current system is extremely ad-hoc, slow and costs the nation heavily.
“A transparent liquidation policy is the need of hour, which should automatically kick-in when FCI is faced with surplus stocks than buffer norms. Greater flexibility to FCI with business orientation to operate in OMSS and export markets is needed,” the committee had observed.