Grain stocks at 4-yr low

FCI purchases huge quantities of maize as prices drop

The Food Corporation of India (FCI) has started wheat procurement for 2014-15. Stocks are at a four-year low. The procurement drive is expected to gather steam in the coming weeks.

According to FCI data, foodgrains stocks in the central pool were 38.11 million tonnes (mt) on April 1, 2014, against 59.75 mt on April 1 last year. The last time FCI had less stocks than current levels was on April 1, 2009 — at 35.58 mt.

Notably, while the stock levels are lower compared with previous years, the stocks are higher than the required quantity of 21.2 mt as on April 1.

According to experts, this could save FCI from storing stocks in excess of its storage capacity as and when the procurement season draws to a close, some time in June.

The drop in overall foodgrains (wheat and rice) stocks in the central pool has been largely due to lower-than-anticipated wheat procurement in 2013-14 and a 30 per cent drop in procurement of rice against the target, which pushed down the foodgrain stock in the central pool.

In 2013-14, FCI purchased about 25 mt of wheat against a target of 40 mt, while rice procurement till date was estimated at about 26 mt against a target of 34 mt.

Although rice procurement continues till September (rice crop year is from October to September), bulk of the purchases would be over by March. The corporation has self-owned and hired storage capacity of over 72 mt.

From the 38.11 mt of foodgrains stock, wheat were estimated to be around 17.83 mt, while rice was estimated at 20.27 mt. April is the crucial month for FCI, as this is the time when procurement of wheat starts in full swing across the country and the stock position shows signs of deteriorating. It also signals the way things would move in the coming months.

Meanwhile, in a related development, FCI has procured the highest quantity of maize since 2009-10 as bumper harvest pulled down market rates.

According to a senior government official, till March 31, 2014, FCI procured around 109,000 tonnes of maize, which was among the highest since 2009-10. In 2012-13, FCI procured just 2,243 tonnes of maize.

Other officials said apart from a drop in price due to bumper harvest, the Corporation is also purchasing maize to meet the requirement of coarse cereals under the National Food Security Act.

Industrial grade maize, used by the feed meal and processing industry, is priced at Rs 1,145-1,200 a quintal in the open market - much below the government-fixed maximum selling price of Rs 1,310 a quintal. India’s maize production in 2013-14 kharif season is estimated to be around 18 million tonnes and for the full year, it could be over 23 million tonnes.

 

Foodgrains Stocks in Central Pool (in million tonnes)
Date	Stocks
1-Apr-14	38.11
1-Apr-13	59.75
1-Apr-12	53.39
1-Apr-11	44.31
1-Apr-10	43.3
1-Apr-09	35.58

Note: foodgrains include both rice and wheat

Source: Food Corporation of India