Centre reduces wheat prices offered to bulk users to check rates

Last month, the government announced plans to sell 30 lakh tonne of wheat in the open market from its buffer stock under the Open Market Sale Scheme (OMSS) in order to check rising wheat and wheat flour prices.

Out of the 30 lakh tonne, Food Corporation of India (FCI) will sell 25 lakh tonnes to bulk consumers like flour millers through e-auction, 2 lakh tonnes will be given to states/union territories and 3 lakh tonne to institutions and state-PSUs at concessional rates for converting wheat into wheat flour.

"After the announcement of OMSS Policy, the Government of India has observed that the market prices of wheat are still very high," the food ministry said.

It has also been observed that due to the inclusion of freight charges in base prices for auction under OMSS, the auction rates in states which are away from Punjab, Haryana and Madhya Pradesh are very high, especially in the northeast, east, and southern regions, it said in a statement.

In order to reduce the price of wheat and wheat flour (atta), the ministry decided not to add "any transportation cost component", which will help the supply of wheat to the general public in different parts of the country at a reasonable price.

The reserve price for the sale of wheat under OMSS will be Rs 2,350 per quintal pan India for fair and average quality, and Rs 2,300 per quintal for Under Relaxed Specifications (URS). The states are allowed to purchase wheat from FCI for their own schemes at above reserve prices without participating in e-auction.

Further, the rate of wheat has been reduced to Rs 21.50/kg for institutions like Nafed, NCCF, Kendriya Bhandar, state cooperatives, etc as well as community kitchens and NGOs engaged in relief operations.

"This concessional rate for NCCF/NAFED/ Kendriya Bhandar/State government cooperatives/ Federations etc will be applicable with the stipulation that they will convert wheat to atta and offer it to the public at an MRP not exceeding Rs 27.50/Kg," it added.

FCI has already sold 9.26 lakh tonnes of wheat out of 25 lakh tonnes to traders, flour mills, etc in the course of the first e-auction held during February 1-2. The next auction will be held on February 15.

FCI, the government's nodal agency for procurement and distribution of foodgrains, had around 156.96 lakh tonnes of wheat as of January 26 in the buffer stock. On April 1, the country would have a wheat stock of 96 lakh tonnes, just above the buffer norm requirement of 75 lakh tonnes.

Under the OMSS policy, the government allows FCI to sell food grains, especially wheat and rice, at predetermined prices in the open market from time to time to bulk consumers and private traders. The purpose is to boost the supply during the lean season and moderate the general open market prices.

The Centre had banned wheat exports in May last year to control prices, after a slight fall in domestic production and a sharp decline in the FCI's procurement for the central pool.

India's wheat production fell to 106.84 million tonnes in the 2021-22 crop year (July-June) from 109.59 million tonnes in the previous year due to heat waves in a few states.

The procurement fell sharply to 19 million tonnes this year from around 43 million tonnes last year. The area under coverage for wheat crops in the current rabi (winter-sown) season is slightly higher.  The procurement of new wheat crops would commence on March 15.