The Food Corporation of India on Wednesday sold 0.5 million tonne (MT) of wheat in the open market through third e-auction to private bulk buyers such flour millers and food companies aimed at curbing spike in prices of the essential commodity.
Since the beginning of the month, FCI has sold 1.8 MT cumulatively so far against an approved 2.5 MT of grain to be sold under the open market sale scheme.
According to an official note, against the base reserve price of Rs 2138.12/quintal for wheat, average prices FCI received from the bulk buyers was Rs 2172.08/quintal.
FCI has realised Rs 1086 crore in the third e-auction.
An official note stated that wheat prices are cooled down and ruling below Rs 2200/quintal on average. “The offloading of wheat is showing the desired results of overall reduction in wheat prices,” according to the note. The fourth e-auction of wheat will be held on March 1, 2023.
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.
The government on Tuesday has decided to offload an additional 2 MT of wheat in the open market from the FCI stocks through e-auction.
The reserve prices of wheat for fair and average quality announced is marginally higher than the minimum support price (MSP) of Rs 2125/quintal announced for the next marketing season 2023-24 (April-June).
At present, the FCI has wheat stock of 13.2 MT while buffer requirement for April 1, 2023 is 7.4 MT.
The wheat stocks held with FCI by April 1, 2023 would be a comfortable 9.7 MT against a buffer of 7.4 MT, as per the food ministry’s assessment .
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 – 22, wheat prices declined by 8 – 20% across mandis. The modal mandi prices are ruling around Rs 2300/quintal at present for new crops which has started to arrive in mandis in Gujarat and Madhya Pradesh. The mandi prices had touched Rs 2900/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 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 India Meteorological Department predicting a heat wave in the next few 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. This may adversely impact FCI’s wheat procurement drive.