NEW DELHI: The Centre’s decision to offload wheat in the open market through the e-auction process reduced the spiralling inflation to an extent. Chairman & Managing Director of Food Corporation of India (FCI) Ashok KK Meena speaks to Jitendra Choubey on how successful the process was and the challenges over the procurement of wheat this year.
The sale of wheat under the Open Market Sales Scheme-Domestic (OMSS) through the e-auction process is not picking up as it did in the first round. What is the reason behind this?
I think there is some miscommunication regarding this issue. The reality is that in the four e-auctions which have been conducted, we sold 23.5 Lakh Metric Tonnes (LMT) of wheat, which means that on average, in each auction, we managed to sell over 5 LMT to successful bidders, which is satisfactory. Please note that in order to discourage hoarding and encourage more bidders, we had put a restriction that no bidder can take more than 3000 metric tonnes (MT) in one auction.
To give you the total outlook, right now, more than 17 LMT of wheat has already been lifted from different FCI go-downs and taken to the market. The response of the buyers and the flour millers has been quite phenomenal. In the first e-auction, the response was outstanding while in the second round, the response was slightly lower. Since we reduced the price in the third e-auction, the sale again picked up. In the fifth round, we are offering around 11.87 lakh metric tonnes of wheat. So, from this perspective, I think the OMSS operations have been quite successful.
The data shows that the price of wheat fell down after the first e-auction but not after that. What do you make of it?
Yes, prices fell after the first e-auction because that was the first supply intervention by the government. In the second round, prices came down a little but not too much, because the reserve price was still higher at around Rs 2,350. In the third e-auction, when we brought down our reserve prices to Rs 2,125– 2150, the prices came down further. Even data shows this reduction in price. In a recent stakeholders’ conference, flour millers and the wholesalers also acknowledged that the wheat wholesale price has come down in their region of Rs 22-23/kg and the retail price of aata in the country (non-branded) came down to Rs 27-28.
Last year we were short of our wheat procurement target. What is the target of buying wheat in
this season?
Under the prevailing conditions and based on last year’s procurement, I would like to build up my stock of wheat for the coming days. The national requirement of wheat is around 250 LMT. We had a discussion with all the state governments on March 1 in which we decided on a realistic target of 342 LMT.
What are the challenges before the FCI in procurement this year?
One of the issues we are concerned about is climate. We hope that the heat wave would not be as intense as IMD has forecast which may affect adversely production and grain quality, especially in Punjab, Haryana and Western UP. Heat can cause the grain to shrivel and consequently reduce production by around 20-25 per cent. The second challenge is the global situation. Given ongoing Russia–Ukraine conflict, the international prices will have some spill-over effect on the Indian market. The government is cautious about giving any relaxation to the exports. Our foremost priority is to maintain national food security.
Currently, how much wheat and rice is available in our buffer? Is it below the required norms?
Our norms are period-based. For example, on April 1, our norm for wheat is 75 LMT which includes operational reserve and the buffer stock. So, even after selling 23 LMT and another say, 11 LMT, also goes our way, then our buffer stock will remain around more than 90 LMT which is comfortably higher than the buffer norm required on April 1.
The rice buffer situation is much better. In the current kharif marketing season of 2022-23, we have already procured paddy which is equivalent to 470 LMT of rice which is the annual requirement even at a higher level of distribution under different schemes.
Any chance of a rethink in the government’s decision to ban export of wheat?
I don’t think there will be a rethink on that in the near future.
Is the government open to importing wheat?
Given the production level and the hard work of our farmers, I don’t think there will be a need to do that. We do not want such a scenario where we need to import wheat.
The government is promoting millets a lot. But the procurement data shows the target falling short by over 60 per cent. How do you see this?
We want our grains market to function as well as our procurement process to support farmers. We give a fixed minimum support price (MSP) to farmers’ produce. But in the meantime, if farmers get better prices in the open market, they are welcome to sell it there. MSP is helping us do the procurement of wheat and rice, where the MSP becomes slightly higher than the market price. So, to avoid distress sale conditions, procurement at MSP is a fine thing that the government is working on.