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Govt fixes high OMS price for wheat to force private traders to buy from farmers

Govt fixes high OMS price for wheat to force private traders to buy from farmers
Published: May 3, 2019 1:24:25 AM
FCI was 39.82 million tonne as of April 1, as against 13.58 million tonne buffer norm.

FCI was 39.82 million tonne as of April 1, as against 13.58 million tonne buffer norm.
By Prabhudatta Mishra
The food ministry has fixed the reserve price of wheat under open market sale from official stock at `2,080/quintal, much higher than MSP, during the procurement period April-June and announced `55/quintal increase in each of the subsequent quarters. This is seen as a move to force private traders to buy from the mandis now instead of entirely depending on the government sale in off season as the bulging stocks put pressure on the Food Corporation of India (FCI) to cut purchase.
The reserve price of wheat is `240 more than its minimum support price of `1,840/quintal. If traders know that they will have to pay such high price later, they may be tempted to buy at MSP and keep the grains with them, officials said. The reserve price is valid for Madhya Pradesh, Punjab and Haryana. For other states, FCI will add railway freight (ex-Ludhiana) and road transport costs to nearest depot in the reserve price. A total quantity of 10 million tonne has been approved for the open market sale scheme (OMSS) during 2019-20, but the government is ready to release more if demand is there, the officials said. Last year, the OMSS wheat sale was about 7 million tonne out of 10 million tonne approved.
“At the current reserve price, the offtake will be lower than last year. The message is clear that private traders and flour millers should buy from mandis during procurement,” said Sanjay Puri, president of Roller Flour Millers Federation of India. The objective of OMSS to keep the market price under control seems to have lost with such high reserve price, he said and added that traders with large holding capacities would benefit as millers keep on an average one month of stock.
The FCI had 16.99 million tonne of wheat in its reserve as on April 1, more than double of 7.46 million tonne buffer norm. The Centre has set a target of buying 35.7 million tonne this year as the country is expected to have a record 99.12 million tonne production in 2018-19 crop year (July-June).
The annual requirement of wheat under the National Food Security Act and other welfare schemes is 30-31 million tonne.
The food ministry has also approved sale of 5 million tonne of rice under OMSS from the stocks held by FCI during FY20. The reserve price of rice has been fixed at `2,785/quintal until September 30, 2019. The price may be increased from October 1, if the paddy MSP is increased during 2019-20 crop year (July-June). The rice stock with
FCI was 39.82 million tonne as of April 1, as against 13.58 million tonne buffer norm.

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