Back India may reduce wheat import duty if needed, says FCI chairman

All-India average retail prices of wheat increased by nearly 1% to ₹29.13 per kg in one month, while rice retail prices have gone up 1.7% to ₹39.88 a kg, according to data by the Ministry of Consumer Affair’s price monitoring division. The spike in wheat prices despite the stock limit, which was imposed on 12 June.

The price rise is attributed to a likely fall in wheat production. Though the agriculture ministry pegs wheat output 4.6% higher on year in 2022-23 (July-June) at nearly 113 million tonnes (mt), the industry estimates 10% lower harvest from the government’s estimation. According to experts, wheat prices are expected to move up further in view of El Nino compromising monsoon rainfall.

To curb the rising trend in retail prices, the government has decided to conduct open market sales operations (OMSS) of wheat immediately and rice from 5 July. In the first e-auction, the quantity for wheat will be 400,000 tonnes and 500,000 tonnes for rice. The wheat OMSS base price including all other costs like transportation and labour charges will be ₹2,150 a quintal for fair average quality (FAQ) wheat and ₹2,125 per quintal for Under Reduced Specifications (URS) quality wheat. In the case of rice, the reserve price across India has been set at ₹3,100 a quintal.

The government has a stock of 8.7 mt wheat and 29.2 mt rice for market interventions and other purposes. These stocks are after ensuring foodgrains for public distribution system (PDS) requirement and buffer requirement.

The first tender of wheat for OMSS will be uploaded on FCI’s e-auction platform tonight and 10-100 tonnes per tender could be bid, FCI head said, adding that the EMD for participation in the e-auction has been reduced by 50% from 100% to accommodate small and marginal traders and processors of wheat.

“The bidding is also restricted to local buyers by ensuring that the GST registration of the state is mapped and checked before stocks are released. These measures are taken to ensure a wider local reach for the stocks offered in a particular state,” Meena said.

Wheat will be offered from 457 depots across the country. About 271 fresh empanelment of buyers were done after April this year and there are 2093 active empanelled bidders till date.

The government offloaded about 3.4 mt wheat when it did OMSS in January this year for one and half months to cool off skyrocketing prices.