Open market sale of cereals to continue till prices moderate
The corporation, which commenced weekly e-auction for wheat last week for the first time this fiscal, will be conducting the first e-auction for selling rice to bulk buyers on July 5.
The government will continue to sell rice and wheat in the open market through weekly e-auctions from the Food Corporation of India’s surplus stocks till inflationary trend in cereals prices is arrested, a senior food ministry official said.
The corporation, which commenced weekly e-auction for wheat last week for the first time this fiscal, will be conducting the first e-auction for selling rice to bulk buyers on July 5.
In the initial phase, the government approved the selling of 1.5 million tonne (MT) of wheat and 1 MT of rice.
The Food Corporation of India (FCI) has kept Rs 3,100/quintal as base price for rice to be sold through e-auction.
Although the FCI has been selling its surplus wheat in the market during the January-March period, which is considered a ‘lean period’ annually, the corporation’s attempt to sell rice in the market hasn’t found many takers from bulk buyers or traders.
“Till the time prices are moderate, we will continue to sell foodgrains from the FCI’s stocks,” a food ministry official told FE. The official said current grain stocks are above the buffer and sufficient to carry out open market sales.
Officials said that the government is discussing several options including reducing import duty on wheat from the current level of 40% to control domestic prices.
Retail wheat prices rose by 12.61% in May, against 15.46% the previous month while inflation in rice rose by 11.33% in May, a marginal decline from the previous month.
According to department of consumer affairs data, the modal retail wheat prices declined by 9% to Rs 25/Kg on Saturday against the prices prevailing in January, 2023 while rice prices have fallen by 4% to Rs 35/kg since the beginning of the year.
Officials say with the India Meteorological Department predicting normal monsoon rains this month, paddy transplantation will pick pace, thus helping bring down rice prices in next a few weeks.
Due to the delay in monsoon onset, paddy transplantion has been carried out over 2.65 million hectares so far, down by 26% on year as on June 30.
The government had imposed stock holding limits on wheat for the first time since 2008 for traders, wholesaler and retailers till March 31, 2024 to control increase in prices.
In the first e-auction of wheat held last week, the corporation sold only 89,000 tonne of wheat to bulk buyers like flour millers against 0.4 MT offered.
Around 900 purchasers of wheat participated in the e-auction while the average bid for the fair and average quality of wheat was Rs 2153/quintal, which is just above the minimum support price of Rs 2125/quintal for the current season.
As on July 1, the FCI has 25.92 MT of rice, which excludes 15.84 MT of rice yet to be receivable from millers. The corporation needs 36 MT of rice annually for allocation under the National Food Security Act (NFSA). The new procurement season (20223-24) for paddy begins on October 1.
The wheat stock with the FCI in the beginning of the month is 30.09 MT while the government needs 18.4 MT annually for the implementation of the NFSA.
The buffer norm for July 1 is 27.58 MT (wheat) and 13.54 MT (rice).
Rice production in the 2022-23 crop year is estimated at a record 135.5 MT while wheat output is estimated at 112.74 MT.
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