More flexibility in wheat distribution under OMSS

The ministry is in the process of notifying new norms to offload more foodgrain.

The mammoth stock of foodgrain has finally persuaded the Ministry of Consumer Affairs, Food and Public Distribution to adopt more flexibility in the distribution of wheat for the private players. The Ministry is in the process of notifying the new open market sales scheme (OMSS) to offload large quantity of foodgrain in the market.

The sources close to the development told Business Standard, it has been proposed that 3-9 tonnes of wheat per depot per firm each day would be distributed under the new scheme for the private traders for which no tenders would be floated.

The total volume of allocation and the price of wheat is under approval which should be completely shortly.

This, according to sources, was the outcome of the meeting of the state food secretaries with the Food Secretary held in New Delhi on July 27. There is a probability of some price cut as the open market price of wheat was less than the price offered by the Food Corporation of India (FCI).

FCI has a backlog to the tune of 2.3 million tonnes (mt) of the wheat allocated for OMSS last year (2009-10).

An allocation of 2.081 mt was made under OMSS Bulk (domestic) and 2.135 mt under OMSS retail (domestic). Grain amounting to 1.7 mt has been lifted so far, which is less than 50 per cent of the total allocation.

The new scheme might help agencies to offload the grain which is well above their storage capacity. FCI has a total stock of 35 mt wheat all over India.

Millers in most parts of India (Punjab, Haryana, Karnataka Tamilnadu) rue that the issue price of FCI is over Rs 1,400 a quintal, whereas they get wheat in the open market at a price between Rs 1,370 a quintal and Rs 1,380 a quintal. This price variation also pressed millers in the southern states to import APW from Australia. But the price revision in the international market from 4.6 cent a bushel (in Februray 2010) to 7.1 cent a bushel (current price) has reversed the trend. This may also help FCI to utilise the huge stock of wheat that needs to be cleared to make way for the paddy crop.

M K Duttaraj, the immediate past president of Roller Flour Milers Association of India said that this move may help in the price correction.

At the same time, millers expect the government to allocate wheat to them on the same basis as being mulled for the private traders. Adi Narayan Gupta, senior vice-president of Roller Flour Millers Association of India said an allocation of 100 tonne per mill per day can help flour mills to utilise their full capacities.