Govt to sell excess rice stocks in open market
New Delhi, Feb 7:
For the first time in many years, the Indian government has decided to sell surplus rice stocks in the open market to bulk buyers and traders through e-auction.
Sources said that around three million tonne of rice would be offered under Open Market Sale Scheme (OMSS) to bulk buyers at a rate derived from the Minimum Support Price plus freight cost to destination from Ludhiana, Punja b.
The rice is expected to offered to private purchasers at around Rs 2340 per quintal for the grade – A quality of rice procured by the Food Corporation of India (FCI).
The Inter-Ministerial Group (IMG) consisting of Secretaries of the food, expenditure and consumer affairs department would be soon seeking formal nod from food and financial ministries’ prior to grain sell.
Officials said that as per the FCI’s estimate, the rice stocks with the corporation at the end of the March, 2015 would be around 15.5 million tonne after taking into account receipt and offtake. As per the revised buffer stocks norms, the FCI should hold rice stocks of around 13.5 million tone thus rendering a chunk of rice stocks as ‘excess’.
Sources said the minimum and maximum auction quantity would be in the range of 50 tonne to 3500 tonne. “The state government would also asked to participate in the e-auction for OMSS),” an official said.
The FCI has been selling excess wheat stocks through OMSS to bulk buyers since 2009-10.The corporation has sold 3.5 million tonne of wheat in the open market till Friday through weekly e-auctions.
However the government had set a target of uploading 10 million tonne of wheat under OMSS by March, 2015 which is unlikely to materialise. In 2013 -14, the FCI sold mor than 6.1 million tonne of wheat in the open market from its stocks.
Meanwhile, the FCI has asked the food ministry to launch OMSS for wheat stocks just after procurement of grain for the 2015-16 season gets over by June, 2015.
While the wheat purchase from the farmers for the current rabi marketing season set to commence from April, 2015, the FCI has huge wheat stocks of 25 million tonne at the start of January, 2015 while the buffer stocks norm is only 13.8 million tonne.
The FCI conducts weekly auction to sell wheat in the open market using commodity bourse NCDEX platform. The government has set a reserve price of Rs 1,500 per quintal plus freight cost to the consuming locations.
Besides, the buyers have to pay 5% extra on the base prices for the last year’s wheat crop (2014-15 season) whose procurement by government agencies ended in June, 2014.
Last month, for better management of foodgrains, the Cabinet Committee on Economic Affairs (CCEA) had given nod for constitution of an IMG to offload excess stocks, in the domestic market through open sale or exports. IMG has been empowered to take a call on open market sale of excess foodgrains while earlier cabinet had to give approval for such move.