On Wednesday, the Food Corporation of India (FCI) sold 5,40,000 tonnes of wheat to private bulk buyers such as flour millers and food companies through the fourth e-auction, taking the total grain sold in the open market this year to 2.35 million tonnes. The e-auction witnessed participation from more than 1,000 bidders across 23 states. The average price of wheat realized by FCI was Rs 2,193.82/quintal, which is higher than the Minimum Support Price (MSP) of Rs 2,125/quintal fixed for the next procurement season (2023-24) beginning on April 1.
Through open market sales, the government aims to bring down the mandi prices of wheat to MSP for the 2023-24 marketing season (April-June) in the next couple of weeks, so that agencies get sufficient volume of grain for procurement. The government is hoping that the sale of wheat will have a significant effect in cooling down the prices of wheat and atta all over the country.
In the last three auctions held since the beginning of February, FCI has sold 1.8 million tonnes of wheat to bulk buyers. According to a statement by the food ministry, the sale is likely to remain stabilized with the future tenders for open sale of wheat.
The FCI will conduct its last e-auctions of wheat on March 15, 2023. The government has approved the selling of 5 million tonnes of wheat in the open market, which includes 5,40,000 tonnes of grain allocated to state governments and agencies such as NAFED, Kendriya Bhandar, and NCCF for selling flour (atta) at a maximum retail price of Rs 27.50/kg.
At present, the FCI has a wheat stock of 13.2 million tonnes while the buffer requirement for April 1, 2023, is 7.4 million tonnes. As per the food ministry’s assessment, the wheat stocks held with FCI by April 1, 2023, would be a comfortable 9.7 million tonnes against a buffer of 7.4 million tonnes.
The inflation in wheat prices rose by a sharp 25.05% on year in January, pushing up retail food inflation to 5.94% from 4.19% reported in the previous month.
The open market sale policy allows the government 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 aim is to boost the supply during the lean season and moderate the prices.
The agriculture ministry’s estimate of a record wheat harvest of 112.18 million tonnes for the 2022-23 crop year (July-June) has given a boost to the prospects of the government’s procurement drive for the next marketing season, which begins on April 1.
The sale of wheat in the open market has several advantages. Firstly, it helps in cooling down the prices of wheat and atta all over the country. Secondly, it ensures that the agencies have sufficient volume of grain for procurement. Thirdly, it boosts the supply of wheat during the lean season and moderates the prices.
The government’s approval of selling 5 million tonnes of wheat in the open market, including 5,40,000 tonnes of grain allocated to state governments and agencies such as NAFED, Kendriya Bhandar, and NCCF for selling flour (atta) at a maximum retail price of Rs 27.50/kg, will help in further stabilizing the prices of wheat and atta.
