The government on Tuesday decided to offload an additional two million tonne (MT) of wheat in the open market from the Food Corporation of India (FCI) stocks through e-auction to private bulk buyers such as flour millers and food companies to curb spike in price of essential commodities witnessed in the last six months.
Last month, the government approved sale of 2.5 MT of wheat in the open market to bulk buyers and 0.5 MT of grain is allocated to the state governments and agencies such as Nafed, Kendriya Bhandar and NCCF for selling flour (atta) at reasonable rates.
Since the beginning of the month, FCI has sold 1.3 MT of wheat to bulk buyers from two e-auctions held so far from an approved 2.5 MT.
Last week, the government had reduced the reserve prices of wheat to be sold in the open market from the FCI stock to Rs 2,150/quintal from the next e-auction to be held on Wednesday.
The government has also reduced the price of 0.2 MT of wheat offered to institutions like Nafed, NCCF and Kendriya Bhandar to Rs 21.50/kg from `23.50/kg. These institutions were offered wheat for converting the grain into flour and sell it at a maximum retail price of `27.50/kg instead of `29.50/kg.
“The reduction in reserve price along with additional offloading of 2 MT of wheat will collectively help in reducing market price of wheat and wheat products for consumers,” according to a food ministry note.
The reserve prices of wheat for fair and average quality announced is marginally higher than the minimum support price (MSP) of `2,125/quintal announced for the next marketing season 2023-24 (April-June). The FCI will conduct e-auctions of wheat till the end of March, 2023.
At present, the FCI has wheat stock of 13.2 MT while buffer requirement for April 1, 2023 is 7.4 MT.
As per the food ministry’s assessment, the wheat stocks held with FCI by April 1, 2023 would be a comfortable 9.7 MT against a buffer of 7.4 MT.
Inflation in wheat prices rose by a sharp 25.05% on year in January, pushing up retail food inflation to 5.94% from 4.19% reported in the previous month.
According to private trade, during February 1-21, wheat prices declined by 8-20% across mandis. The modal mandi prices are ruling around `2,350/quintal at present. The mandi prices had touched `2,900/quintal last month.
Under the open market sale policy, the government allows FCI to sell food grains, especially wheat and rice, at predetermined prices in the open market from time to time to bulk consumers and private traders. The aim is to boost the supply during the lean season and moderate the prices.
The agriculture ministry’s estimate of a record wheat harvest of 112.18 MT for the 2022-23 crop year (July-June) has given a boost to the prospects of the government’s procurement drive for next the marketing season which begins on April 1.
However with the met department predicting a heat wave in the next five days and private weather forecaster Skymet predicting a sharp spike in March temperature, the wheat production in the current crop year is likely to be hit like last year.