Flour millers urge govt to cut in wheat sale price from FCI stocks

They say that it will bring down prices of atta and packaged food such as biscuits

As the government looks to liquidate its mounting stocks of wheat, flour millers have advised it to lower the rate at which wheat is sold for open market operations by Rs 500 a quintal, saying the move will help it to earn around Rs 16,000 crore in revenues.

This is assuming that six million tonnes of wheat are liquidated after the price cut by way of domestic demand.

Food Corporation of India (FCI), the largest holder of wheat in India, also has direct control at which products such as atta, biscuits etc are available to the average consumer, particularly those outside the ambit of the public distribution system.

At present, it is selling its good quality wheat at Rs 2,135 a quintal and lustre loss wheat at Rs 2,080 a quintal.

Flour millers are demanding a further reduction of Rs 500/quintal in this price as it has not been revised since last December.

Their argument is that with government holding excess quantities of grains, and lowering of the wheat sale price will make by-products cheaper for consumers.

“Flour mills operate at a small margin of 1-2 per cent and hence any reduction in open market sale price by the government will lead to direct benefit for the consumers,” said Sanjay Puri, President, Roller Flour Millers Association, a body of over 2,500 flour millers in the country.

He said if the government lowers the open market sale price by Rs 500 a quintal, it will also help check the alleged diversion of grains meant for PDS to open market as arbitrage will come down.

The export market will also benefit, as at present Indian wheat is priced at Rs 21 per kg while the wheat in the export market is quoting at Rs 14-15 a kg.

“Reducing the open market price will bring this closer to the international market and boost exports,” Puri said.

However, critics say that the argument given by the millers is wrong, as the country does not have the appetite to absorb another six million tonnes of wheat when lots of grains are being distributed through PDS and under Garib Kalyan Yojana.

In 2019-20, just around 2.8 million tonnes of wheat were sold in the open market, that too when extra grains were not being sold free as is the case now. They also question the revenue earned projections.

They suggest that instead of lowering the OMSS rate, government should give some incentive to export which will help in clearing the stocks faster.

“Reducing the OMSS rate by Rs 5 a kilogram will not add much to the offtake. Moreover it will hurt those farmers who are holding on to their stocks. A better option according to me, will be to give a Rs 7-per-kilogram incentive for export which will quickly push 5-6 million tonnes of wheat to neighboring Bangladesh, Nepal and some quantities to Indonesia, Thailand and Korea,” a leading international grain trader said.