India may hike reserve price of wheat in open market sale

The government recently announced to sell 15 lt of wheat in the open market from the stock held by FCI at a uniform price of ₹2,125/quintal for the URS variety and ₹2,150/quintal for the FAQ variety. Govt to offer 5 lt wheat from FCI in the first round of auction, tender likely on June 23

The Food Corporation of India (FCI) has decided to offer 5 lakh tonnes (lt) of wheat for sale in the open market during the first round of e-auction for which bids may be invited on June 23. However, due to the capping of the maximum quantity at 100 tonnes per entity in each round of auction, the real users may not participate in this year’s open market sale scheme (OMSS), some industry experts said.

The Centre is reconsidering the reserve prices of wheat to be sold through the open market sale scheme (OMSS), sources said. This is because the reserve price is below the rates prevailing in (APMC) yards and traders might try and corner the stocks put up for sale.

As a result, processors, particularly roller flour mills, may be forced to buy from these traders paying additional prices, they said. Besides, the issue of reserve price has also become a bone of contention between processors and the government.

Processors are said to have informed the Food Ministry that they purchased the wheat from the mandis during the harvesting season on the appeal of the government. “Now that if the grain is sold at much lower rates from the prevailing market rates, that too at a uniform price across the country, it will not be viable for them to bring down the rates,” said a flour miller.

The government recently announced to sell 15 lt of wheat in the open market from the stock held by FCI at a uniform price of ₹2,125/quintal for the URS variety and ₹2,150/quintal for the FAQ variety. Out of 262 lt of wheat procured for the Central Pool this year, over 72 percent is under relaxed specifications (URS) variety.

‘Difficult choice’

“The government had two options, either to allow processors to participate without any guarantee that the stock lifted from FCI will be utilized immediately or to allow middlemen to participate and distribute the grain further at a higher price to the real users. It was really a difficult choice,” said an industry expert.

Apart from OMSS, the government on June 12 had also announced the imposition of a stock limit on wheat to check the further increases in prices as mandi rates surged 8 percent in a month.

The pan-India mandi price fell to ₹2,295/quintal on June 12 from ₹2,307/quintal on June 5 as a result of the announcement. However, the rate has again shot up to ₹2,310/quintal as on June 19, official data show.