Open market sale of wheat unlikely to start this month

An unexpected fall in wheat procurement from a “realistic target” has derailed the Government’s plan to start selling the grain in the open market anytime soon, even as the current policy is about to end on July 31. Besides, the Government is closely monitoring prices and there is no concern on that front, so far, official sources said.

businessline last month had reported that wheat auction under the open market sales scheme (OMSS) will not begin before formation of the next government.

In March this year, the Food Ministry approved the policy for sale of foodgrain (wheat and rice) stocks in excess of buffer stocking norms under OMSS which was effective from April 1 and valid until July 31. A review is scheduled on June 7 and the new reserve price may be fixed for the remaining period of the current fiscal, sources said.

• Also read: India’s foodgrain production seen a tad down despite record wheat, rice output 

Sales timing

According to the OMSS policy for wheat, the government has allowed the Food Corporation of India (FCI) to sell the grain to private parties through e-auction at pan India uniform reserve price of ₹2,275/quintal for under relaxed specification (URS) variety, which is same as current minimum support price (MSP) and ₹2,300 for fair and average quality (FAQ) type of all crop years.

However, the timing of the sales has to be decided by the Food Ministry, the policy has prescribed. It further has stipulated that no sale would be undertaken during the procurement period in the wheat procuring States like Punjab, Haryana, Uttar Pradesh, Rajasthan and Madhya Pradesh. The procurement period is over for Punjab and Haryana, while it will continue till June 15 in Uttar Pradesh and Bihar and will conclude by June 30 in other States.

However, as the arrivals of the grain have dwindled considerably, the procurement may end up earlier than schedule.

According to the Consumer Affairs Ministry data, average (of all all five zones) retail price of wheat has been marginally down to around ₹33.50 a kg in May from nearly ₹34 in January. Similarly, the atta (wheat flour) price is at ₹38.70/kg in May from ₹39 in January.

Low stocks

The Centre’s wheat buffer stock, maintained by the Food Corporation of India (FCI), dropped to 25.96 million tonnes (mt) as of May 1 against 29.03 mt a year ago. This is also lower than 30.35 mt recorded on May 1, 2022, when the government could buy only 18.79 mt in the whole of the 2022-23 season due to lower output and higher price in open market. The stock in 2024 is also the lowest since May 1, 2008 when it was 17.69 mt.

• Also read: India’s zero duty wheat imports move may come with riders

Under the retail sale scheme (till July 31), designed to check inflationary trends in food economy, the food ministry this year has fixed the rate of wheat at ₹23/kg offered to semi-government and cooperative organisations like Nafed, NCCF and Kendriya Bhandar, but providing further subsidy from the price stabilisation fund to sell the grain to these agencies at ₹17.15/kg. The allocation to these organisations is also conditional upon sell the atta (after converting from the wheat) at the maximum retail price of ₹27.50/kg.