India: FCI’s new norms in first wheat tender to eliminate millers having ‘excess’ stock

The government’s first weekly e-auction will be held on December 4 for 1 lakh tonnes (lt), which includes on offer a quantity of 5,000 tonne each for Karnataka, Bihar, Gujarat, Haryana, Rajasthan and Maharashtra.

However, the Food Corporation of India (FCI) has introduced new norms with the objective of keeping the processors out of the tender process if they have “excess stock”, which have created resentments among some millers who termed the conditions as ‘reward’ for some private parties for not buying in the open market.

Among other States, FCI is offering 14,000 tonne in Uttar Pradesh, 12,500 tonne in Punjab, 7,000 tonne in West Bengal, 6,500 tonne in Assam, 5,500 tonne in Delhi, 4,000 tonne in Madhya Pradesh and 3,000 tonne each in Jharkhand and Tamil Nadu.

“There is no issue as far as availability of wheat is concerned and it is only the price at which millers have to decide whether to buy or not. But it seems the government is rewarding those who did not make prior arrangement for their processing needs and are not even ready now as they want to be bailed out by FCI,” said a leading industry official in the flour milling sector.

According to the new norm introduced in this year’s OMSS for wheat, FCI has said each bidder has to submit an undertaking saying he does “not have wheat stocks over and above” his monthly processing capacity (on the basis of weekly wheat stock declaration on the WSMS portal). Further it has also been stipulated that while mentioning the monthly processing capacity of the unit in the declaration, the bidder has to submit an undertaking “not to bid for and lift stock in excess of” his monthly capacity.

Industry sources said that if a miller has 2,500 tonne per month of processing capacity and if he has 2450 tonne of stock now, he can bid for a maximum of 50 tonne, as per the new norm.

However, government sources said that since the stock with FCI is not huge and the OMSS has to continue at least until end of February, the quantity has been offered as per an estimated requirement in a state and to make sure it is not used for trading purpose.

The on November 27 announced allowing FCI to offload 25 lt of wheat in market under the Open Market Sales Scheme through e-auction to flour mills and other manufacturers of wheat products, processors and end users by March 31, 2025.

The government said the decision was taken to moderate wheat prices in the open market.

According to data maintained by the Consumer Affairs Ministry, the retail inflation was 4.4 per cent and 6.7 per cent in wholesale on December 1, 2024, compared with the year-ago period. The all-India average retail price of wheat was ₹32.45/kg and that of wholesale was ₹2,949/quintal on December 1.

There is approximately ₹48/quintal rise in wholesale wheat price after the announcement for OMSS.

The Food Ministry further said the Reserve Price has been fixed at ₹2,325/quintal for fair and average quality (FAQ) and ₹2,300/quintal for the category under relaxed specifications (URS) as per the OMSS policy.

However, bidders have to pay additional “applicable transportation cost and taxes”, as per the FCI tender.

Tags: Food Corporation of India, e-auction, wheat, Market, flour mills, FCI