Govt reduces wheat prices offered to bulk users under OMSS to check rates

The government has reduced the price of FCI wheat offered to institutions like Nafed, NCCF and Kendriya Bhandar to Rs 21.50 per kg from Rs 23.50.

New Delhi: With wheat prices still ruling high despite offloading of FCI stock in the market, the Centre on Friday decided to do away with freight charges and sell the grain at a reserve price of Rs 2,350 per quintal to bulk users pan India through e-auction. That apart, the government has reduced the price of FCI wheat offered to institutions like Nafed, NCCF and Kendriya Bhandar to Rs 21.50 per kg from Rs 23.50.

These institutions are being offered wheat for converting the grain into flour and selling it at a maximum retail price of Rs 29.50 per kg, but now they have been asked to sell at Rs 27.50 per kg. A decision in this regard was taken by the food ministry in consultation with its finance counterpart. Last month, the government announced plans to sell 30 lakh tonnes 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 tonnes, 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 tonnes 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 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 supply of wheat to general public in different parts of the country at a reasonable price. The reserve price for 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 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 crop would commence from March 15. (PTI)