Finance Update

rice: Govt plans to offload excess rice, wheat in open market

New Delhi: The government plans to offload excess stocks of

rice

and

wheat

in the

open market

during the fresh procurement season to flour millers and other bulk

consumers

.

The Committee of Secretaries (CoS) met a couple of days ago to decide on the course of action for the open market sale. Once the proposal gets through the CoS and the finance ministry, it will be vetted by the Election Commission of India.

The government normally initiates an open market sale for bulk buyers after procurement. This time, an e-auction is likely to be held during the procurement season ending in June as the Food Corporation of India, the agency that buys foodgrain for the government, is grappling with a paucity of storage space.

“Our godowns are inundated with rice and wheat and we are procuring more in the current season. To make way for the new crop, we need to liquidate wheat stocks in the open market at above the reserve price, which is the sum of the minimum support price of the foodgrain and its procurement cost,” a senior food ministry official said.

The FCI currently holds 26.3 million tonnes of rice and 20.1 million tonnes of wheat, according to data on its website. The government expects to procure 45 million tonnes of rice (kharif and rabi) and 35.7 million tonnes of wheat in the current season.

The government had targeted the sale of 10 million tonnes of wheat and 2 million tonnes of rice in the open market in the previous season.

“We were able to sell 7 million tonnes of wheat and 800,000 tonnes of rice. This year also, the target is likely to be the same,” the official said, adding that there is little demand for wheat in the open market.

“But rice is not the favourite among millers and bulk consumers. We are unlikely to get very good response,” the official said. “But evacuating space from the new harvest is equally important.”

India may produce 115.60 million tonnes of rice and 99.12 million tonnes of wheat in 2018-19, according to the government’s second advance estimates of food grain production in February.

Source

Prakash Poojary
Business Analyst

Leave a Reply