The Food Corporation of India continues to get lukewarm response for weekly e-auction for rice under the open market sale scheme (OMSS) with traders purchasing just 100 tonne of grains on Tuesday against 0.14 million tonne (MT) offered.
The FCI has been selling rice under OMSS at Rs 3,151/quintal, below the economic cost of grain for 2022-23 at Rs 3,537/quintal.
In the four e-auctions held since the beginning of the month, the corporation has sold only 570 tonne of rice from its surplus grain stocks to bulk buyers.
According to traders, factors such as the limit on purchase of grain by each buyer and higher reserve prices have led to lower lifting of rice from FCI’s stocks.
To curb inflation in rice, the government last week had imposed a ban on export of non-basmati white rice with immediate effect. The FCI has also stopped providing rice to distilleries for ethanol manufacturing.
Sources told FE that average bid price for rice under OMSS this week was Rs 3,151/quintal which was on a par with the reserve price.
The corporation currently has 25.23 MT of rice, which excludes 14.7 MT of rice yet to be receivable from millers. The rice stock is against the buffer of 13.54 MT for July 1. It needs 36 MT of rice annually for allocation under the National Food Security Act.
The new procurement season (2023-24) for paddy begins on October 1.
Meanwhile, the FCI received bids for 0.1 MT of wheat to be sold to bulk buyers, including flour millers and food companies, against 0.16 MT offered in its fifth weekly e-auction held under the scheme.
The average bid for the fair and average quality of wheat was Rs 2,182.68/quintal which was marginally above the reserve price of Rs 2,150/quital. The minimum support price (MSP) for wheat in the current season is Rs 2,125/quintal.
“In the current tranche of e-auctions, the reduction in retail price of wheat is being targeted by offering up to 100 tonne per buyer for encouraging more small and marginal end users to buy the foodgrain,” according to an official statement.
However, an official with a leading private company dealing with wheat products said that the limit of 100 tonne per buyer per region is a small quantity for those who want to go for bulk purchase.
A food ministry official said the FCI will continue to sell foodgrains from its surplus stocks till inflationary trend in cereals prices is curbed. The official said current grain stocks are above the buffer and sufficient to carry out open market sales.
As per earlier policy, the corporation had been selling surplus wheat to bulk buyers during the lean season (January-March).
It sold 3.37 MT of wheat under the scheme during February 1-March 15 through weekly auctions. The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.
In the past many years, the sale of rice through an e-auction has not received encouraging responses.
Officials said the government is discussing several options, including reducing import duty on wheat from the current level of 40%, to control domestic prices.
The government had imposed stock holding limits on wheat for the first time since 2008 for traders, wholesalers and retailers till March 31, 2024 last month to control increase in prices.