India may hike reserve price of wheat in open market sale
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 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 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 open market from the stock held by FCI at a uniform price of ₹2,125/quintal for URS variety and ₹2,150/quintal for FAQ variety. Out of 262 lt of wheat procured for the Central Pool this year, over 72 per cent 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 utilised immediately or to allow middlemen to participate and distribute the grain further at 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 imposition of stock limit on wheat to check further increase in prices as mandi rates surged 8 per cent 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.
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