E-auction gathers pace: Open market sale of wheat by FCI may hit all-time high of 10 MT

By Sandip Das

The Food Corporation of India (FCI) has sold 5.51 million tonne (MT) of wheat under the open market sale scheme (OMSS) so far in the fiscal, and officials say the sales in the current fiscal year would reach all-time high of 10 MT.

This year, the FCI started offloading wheat from its stocks in June, much earlier than the usual practice of commencing open market sales by January. The corporation sold 0.35 MT of grain on Wednesday to bulk buyers, the highest since the weekly e-auction was launched in June.

The bulk buyers purchased wheat at Rs 2,181/quintal against a reserve price set of Rs 2,129/quintal. The corporation received bids with a high of Rs 2,310 for the week ended October 26.

Officials said that because of the government’s intervention of selling wheat in the open market, the modal retail prices on Tuesday was Rs 31.02/kg, 1.34% higher than a year back.

At present, wheat stock with FCI is 17.05 MT, lowest since 2016 against the buffer of 13.8 MT for January 1. To enhance the availability of wheat in the open market, the food ministry recently decided to offer 0.4 MT grain weekly from the FCI stock instead of the current practice of 0.3 MT to the bulk buyers.

Around 5 MT of the grain is required for supplies under the Pradhan Mantri Garib Kalyan Anna Yojana till end of the current fiscal. The government is aiming to sell another 4.6 MT of wheat this fiscal which may lead to the grain stock held with the corporation precariously close to the buffer, an official said.

The government recently announced an additional allocation of 2.5 MT to be sold under the OMSS to bulk buyers through weekly e-auction during January-March, 2024 besides 10.15 MT already approved for the current fiscal.

The government recently announced an additional allocation of 2.5 MT to be sold under the OMSS to bulk buyers through weekly e-auction during January-March, 2024 besides 10.15 MT already approved for the current fiscal.

In addition, around 0.1 MT of wheat has been lifted by Kendriya Bhandar, farmers’ cooperatives Nafed and National Cooperative Consumers Federation (NCCF) so far from FCI at MSP rate for converting into ‘Bharat Atta’ which is being sold to consumers at Rs 27.5/Kg.

The corporation has allocated 0.4 MT of grain to these agencies till January 2024. Sources said after getting lukewarm response for the weekly e-auction of rice from its surplus grian stock, the corporation sold 10,000 tonne of rice to bulk buyers on Wednesday. Since July, the corporation has sold 0.14 MT of rice through a weekly e-auctions this fiscal.

The FCI has been selling rice under OMSS at Rs 2900/quintal, below the economic cost of grain for 2022-23 at Rs 3,537/quintal.

However, the retail prices of rice on Tuesday was Rs 43.33/kg, 14% higher than prices prevail a year back. Retail inflation in wheat declined further to 6.36% last month from 7.61% in September on year because of improvement in supplies due to open market sale by the government.

However, retail rice prices rose by 11.81% in November, marginally higher from the previous month.

This article has been republished from The Financial Express.