FCI sweetens warehousing policy, extends lease period to 10 years

The extension was imperative to offset the exorbitant land cost.

The Food Corporation of India (FCI) has extended the lease period for private warehouses from seven years to 10 years under the Private Enterprenuer Guarantee (PEG) Scheme 2008.

An improvement in food grain production and scarcity of storage space in Haryana and Punjab had put FCI in a fix. A senior official in the corporation said an additional storage space of 7.1 tonnes in Punjab and four tonnes in Haryana was required to address the problem.

While the move has prompted Haryana to scrap tenders floated in June under the seven-year guarantee scheme, Punjab has decided to evaluate the tenders on technical grounds under the seven-year scheme.

 

The move puts the qualified bidders in Punjab in a spot because they will lose the earnest money deposit (EMD) if they want to apply under the revised guidelines.

Under the new guidelines, the land required to set up a warehouse has also been relaxed from three acres to two acres for the first 5,000 tonnes, while for an additional 5,000 tonnes it has been revised from two acres to 1.7 acres. The financial closure can now happen within 45 days of the bid awarded.

Earlier, Haryana had witnessed a quantum leap from three lakh tonnes under the five-year PEG 2008 scheme to 4 million tonnes under the seven-year PEG scheme. The officials are anticipating a better response with the 10-year guarantee scheme.

Punjab gave an overwhelming response. The state got proposals for one tonnes against the 6.7 tonnes requirement. About 500 applications are under various stages of processing. The state plans to invite fresh applications after processing the tenders that were received.

The extension of the guarantee period was imperative to offset the exorbitant land cost in the states. Private players are offered Rs 4.78 a quintal a month (guiding rent) that includes rent preservation cost and supervision charges.

According to FCI, Uttar Pradesh needs warehouses to store 2.6 tonnes of foodgrain while Rajasthan’s requirement is 300,000 tonnes.

FCI earmarks 412,000 tn wheat for open mkt sale
NewsWire18 adds: FCI has earmarked 412,000 tonnes wheat for direct sale to small traders in lot sizes from three tonnes to nine tonnes until September-end under its new open market sale scheme guidelines.

As per new OMSS guidelines, any registered buyers can lift up to 1 truckload or 9 tonnes wheat per day from FCI depots at the reserve price—which includes procurement price and carriage ex-Ludhiana—without having to participate in tenders, a FCI said. Quantities higher than 9 tonnes would continue to be sold through tenders.

The wheat earmarked for sale in smaller lots is from last year’s 2.1 million tonnes allocation for bulk users under the open market sale scheme.

While states were offered wheat at reserve price, it was sold to bulk users via tenders above the reserve price.

Due to the tedious tendering process, bulk users have so far bought only around 1.25 mt wheat out of 2.1 mt on offer.

Purchases by states under the scheme have been even dismal at around 500,000 tonnes out of the 2 mt allocated.

The food ministry has fixed wheat prices ranging between Rs 1,238.89 per 100 kg in Punjab and Rs 1,422.50 in Kerala for open market sale to bulk consumers, the official said. He said sale of wheat through tenders to bulk consumers would continue until September-end and a fresh allocation under OMSS is likely from October 1.

The official said revised allocation quotas for both OMSS schemes—for bulk users and small traders—have already been circulated in states and press advertisements are likely in a few days.

Last month, a ministerial panel decided to allow participation of small traders in the government’s open marker sale scheme, in a bid to offload burgeoning grain stocks. As on August 1, government’s central pool wheat stocks stood at 32.07 mt.