Poor grain quality forces FCI to ditch storage policy

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New Delhi | Published: May 9, 2015 12:10:36 AM

Under the First In First Out policy, FCI supplies foodgrain, mostly consisting of rice and wheat, to the Public Distribution System from the previous stock, while the new crop being procured is stored

In a deviation from the norm, Food Corporation of India (FCI) has decided to supply wheat being procured from farmers to the Public Distribution System (PDS) keeping in mind the quality of grain which had been impacted by unseasonal rains.

Sources told FE that the FCI has decided against following the practice of ‘First In First Out’ (FIFO) as the wheat currently being procured can’t be stored for long.

“Most of the grain procured in the northern regions suffer from lustre loss, which makes it vulnerable to pest attacks, and thus long term storage of the crop is not possible,” a food ministry official said.

Under the FIFO policy, FCI supplies foodgrain mostly consisting of rice and wheat to PDS from the previous stocks, while the new crop being procured is stored. FCI supplies around 22 million tonne of wheat annually to the PDS.

In the last few weeks, the food ministry, following requests from Haryana, Uttar Pradesh, Gujarat and Madhya Pradesh, had given relaxation in quality norms of wheat with respect to lustre loss and increase in quantum of shrivelled and broken grains being purchased from farmers by agencies.

This had led the procurement of wheat picking pace in the last few weeks. Till Friday, more than 22.5 million tonne of wheat has been purchased by FCI and state-owned agencies, while close to 26 million tonne has already arrived in mandis across key producing states.

Wheat procurement usually commences from April 1, but this year, due to unseasonal rains, harvesting got delayed by at least three weeks and so grain procurement picked up only in the last two to three weeks.

The states which have contributed significantly to the wheat procurement drive include Punjab (9.1 mt), Haryana (6.3 mt) and MP (5.4 mt). Although the government is aiming a wheat procurement of 30 mt this year, actual grain procurement could drop to around 26 mt.

The food ministry had imposed a nominal value cut on wheat procured under relaxed specifications, so that, “separate marking and stocking of such stock and its utilisation on priority could be ensured”.

Some minor value cut equivalent of around Rs 3.63 per quintal from Rs 1450 per quintal minimum support price was imposed on the grains not adhering to the food ministry’s revised quality norms.

The purpose of relaxing norms was to ensure that farmers in key wheat growing states such as Haryana, Madhya Pradesh, Rajasthan, Gujarat and Uttar Pradesh could get the entire MSP for the wheat sold to FCI and state-owned agencies, irrespective of quality.

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