Centre to offload 1 mt wheat in open market

Additional grain to be made available by tweaking strategic reserve norms

With wheat prices not abating even after the government lowered the import duty, the Centre has now decided to release an additional one million tonnes (mt) of wheat in the open market.

The extra supply of wheat from the Food Corporation of India (FCI)’s reserves would help cool down prices in the open market, which had risen by Rs 3-4 a kg in North India in the past 10 days owing to short supplies.

The wheat will be released by tweaking the strategic reserve norms under which the central government has to mandatorily keep three million tonnes of wheat and two million tonnes  of rice by April 1 each year.

The strategic reserve was created in 2008 following bumper harvest. Apart from the reserve, the Centre is supposed to maintain a buffer stock of 21.04 million tonnes as on April 1.

Wheat stocks in the central pool as on October 1, 2016 was 20.52 million tonnes — the lowest in the past nine years owing to fall in procurement.

However, to release additional wheat in the open market, the Centre will lower the wheat stock by one million tonne and raise it by a similar amount for rice.

“We won’t allow wheat prices to rise in the open market,” Food Minister Ramvilas Paswan told reporters.  Till date, the central government has allocated 3.4 million tonnes of wheat in the open market, of which 2.98 million tonnes has already been sold at Rs 1,640 a quintal. However, because of severe shortage of wheat in the open markets due to dry pipelines and lower sales by FCI, wheat rates in Punjab and Haryana have soared to Rs 2,000 a quintal against Rs 1,750 a quintal just three weeks ago.

“With the fresh allocation, we are hopeful that wheat prices would come down in the open market and there would be adequate supplies till March,” said a senior food ministry official.

The Centre had earlier lowered the import duty on wheat to 10 per cent to cut down on retail rates. The Centre expects private traders to import three million tonnes of wheat in 2016-17. Of this, 1.2 million tonnes has already been shipped.

“Our basic intention is to maintain adequate stocks for meeting the TPDS (targeted public distribution system) requirement, while the remaining wheat can be sold in the open market,” the official clarified.

The desperation to offload wheat stocks from central godowns points to the fact that wheat harvest in 2016 might be lower than the Centre’s estimate of 94 million tonnes and closer to trade expectation of 85-90 million tonnes.