Govt to sell wheat and rice in open market to control prices

The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, will conduct an e-auction of wheat on June 28 and that of rice on July 5 to boost domestic supplies and control prices. The tenders will be floated soon.

Amidst the rising retail prices of staples, the government will sell 4 lakh tonnes of wheat and 5 lakh tonnes of rice from buffer stock to bulk consumers and traders in the first round of auctions soon. These measures are part of the Center's protracted plan to rein in rising retail prices for these two common foodgrains.

The government will take all possible measures to bring down retail prices, and this includes a reduction in the duty of wheat, PTI reported

"We are seeing an inflationary trend in retail prices of wheat and rice. The government has directed us to start the Open Market Sale Scheme (OMMSS). The focus is on bringing down retail prices," FCI Chairman and Managing Director Ashok K Meena told PTI.

On June 12, the government imposed stock limits on wheat with immediate effect till March 2024 in a bid to check hoarding and contain rising prices. It also decided to offload 15 lakh tonnes of wheat to bulk consumers and traders from the central pool under the OMSS. The Centre had decided to sell rice to bulk buyers under the OMSS but did not specify the total quantity.

"We are issuing the tender for wheat tonight (Friday) and the first round of auction for 4 lakh tonnes will be held on 28th June. The auction of 5 lakh tonnes of rice will be held on July 5," he said.

The maximum quantity that a buyer can bid for is limited to 100 tonnes in this e-auction. For small wheat processors and traders, the minimum quantity has been kept at 10 tonnes.

The reserve price of wheat has been fixed at Rs 2,150 per quintal for Fair and Average Quality (FAQ) grain and Rs 2,125 per quintal for under relaxed specifications (URS). The reserve price of rice has been fixed at Rs 3100 per quintal.

Meena said the bidding is also limited to local buyers by ensuring that the GST registration of the state is mapped and checked before the stocks are released. To identify genuine processors and traders, a valid FSSAI licence is also made mandatory for participation.

To control the hoarding of wheat, the government has decided that the declaration in wheat stock monitoring system portal is mandatory for participation in the auctions. Asked about the total quantity of rice to be sold through OMSS, Meena said it has not been decided yet.

However, he said the government has surplus 87 lakh tonnes of wheat and 292 lakh tonnes of rice that can be used for the OMSS if the situation warrants. This surplus foodgrain quantity is after meeting the requirement of under the National Food Security Act (food law), other welfare schemes and buffer stock norms.

Meena asserted that the government is providing free food grains to 80 crore people under the food law..

Through the OMSS, he said the government seeks to ensure that the remaining 60 crore people get wheat and rice at a reasonable price.

The FCI CMD hoped that the retail prices will start coming down soon.

"All available options, including reduction of import duty on wheat, will be exercised if needed to bring down the retail prices," Meena asserted.

At present, the import duty on wheat is 40 per cent. Last year, the government had banned wheat to boost domestic supply and control prices. It had also sold 34 lakh tonnes of wheat under the OMSS last fiscal.

On June 12, Union Food Secretary Sanjeev Chopra said the stock limit has been imposed on wheat because some "unscrupulous elements are holding the stock and creating artificial scarcity" driving mandi prices up by almost 8 per cent in the past month.

"The wholesale and retail prices have not gone up to that much. With the lag, we expect the wholesale and retail prices will also go up as modal mandi prices are showing upswing. The government has imposed stock limit on wheat..." he had said.

Wheat prices in mandi rose to Rs 2,302 per quintal on June 7 from Rs 2,129 per quintal a month before.

A stock holding limit of 3,000 tonnes has been imposed on wheat traders/wholesalers; 10 tonnes on retailers, 10 tonnes for each outlet of big chain retailer and 3,000 tonnes at all their depots. In the case of processors, 75 per cent of annual installed capacity.