Thanks to a lukewarm response to its recent open market sale scheme (OMSS) and a global wheat glut impacting India?s export potential, Food Corporation of India (FCI) warehouses continue to overflow.
According to the latest data, FCI?s foodgrain stocks (mainly wheat and rice) at the start of the month were reported at close to 59 million tonne against the strategic reserve and buffer stock norm of 21.2 mt. With a bumper rice harvest expected in the current kharif season, foodgrain stocks are likely to rise sharply during the next few months.
Food ministry sources told FE that FCI is keen on offloading some of the excess stock from previous years? procurement in the open market. However, the move has seen ?negligible? response.
?The OMSS has not found an encouraging response from traders as there are sufficient wheat stocks with private traders this year,? an FCI official said. The corporation aims to sell 8.5 million tonne of wheat under OMSS at R1,500 per quintal from the Punjab and Haryana depots. The wheat stock procured from the 2011-12 season would be sold under OMSS till March 2014.
Besides, the National Food Security Act, 2013, under which the government will need more than 60 million tonne of grain annually, is expected to be rolled out only after a year.
?We need to sell at least 10-12 mt of wheat stock quickly; otherwise we will face a huge storage crunch,? the FCI official said.
The corporation had more than 38 mt wheat at the start of the month and for the public distribution system it will need about 14 mt till March 2014. FCI starts wheat procurement for the new season from April.
Meanwhile, an increase in global output this season is likely to impact India?s export of 2 mt food grain from the FCI stock if the high base price is not revised. Due to a high wheat output this year in key exporting countries such as Russia, Australia, Canada and France, the global wheat price is presently in the range of $260-270 per tonne.
Last year, due to a global shortage, FCI exported 4.5 mt of wheat and realised R7,000 crore at an average price of about $310 per tonne. However, in the case of rice, FCI has a stock of 20 mt against the requirement of 8 mt. Kharif rice procurement would commence only from October and the government has set a target of 34 mt for the 2013-14 season.
