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FCI’s rice e-auction gets tepid response

This is the fifth weekly e-auction of rice held in the current year, which is aimed at curbing spike in grain prices. So far, only 720 tonnes of rice have been sold to bulk buyers.

To curb inflation in rice, the government on July 20 had imposed a ban on export of non-basmati white rice with immediate effect.

The Food Corporation of India (FCI) continues to get lukewarm response for its weekly e-auction of rice under the open market sale scheme (OMSS) as traders on Wednesday purchased just 150 tonnes of the grain against the offer of 0.14 million tonne (MT).

This is the fifth weekly e-auction of rice held in the current year, which is aimed at curbing spike in grain prices. So far, only 720 tonnes of rice have been sold to bulk buyers.

FCI had offered rice under OMSS at Rs 3,124/quintal, which is less than the economic cost of grain for 2022-23 at Rs 3,537/quintal.

Sources told FE that the average bid price for rice under OMSS this week was Rs 3,124/quintal, which was on a par with the reserve price.

To curb inflation in rice, the government on July 20 had imposed a ban on export of non-basmati white rice with immediate effect.

The corporation has also stopped providing rice to distilleries for ethanol manufacturing.

It currently has 24.72 MT of rice, which excludes 13.89 MT of rice yet to be received from millers. The rice stock is against the buffer of 10.25 MT for October 1.

FCI needs 36 MT of rice annually for allocation under the National Food Security Act. The new procurement season (2023-24) for paddy begins on October 1.

Meanwhile, the corporation received bids for 0.1 MT of wheat in its sixth e-auction for bulk buyers, including flour millers and food companies, which was marginally lower than the volume offered in its sixth weekly e-auction held under the scheme.

This year, so far, has recorded a sale of 0.6 MT of wheat under OMSS.

The average bid for the fair and average quality of wheat was `2,208/quintal, which is marginally above the reserve price of Rs 2150/quital. The minimum support price (MSP) for wheat in the current season is Rs 2,125/quintal.

“In the current tranche of e-auctions, the reduction in retail price of wheat is being targeted by offering up to 100 tonnes per buyer for encouraging more small and marginal end users to buy the foodgrain,” an official told FE.

“In the e-auction, traders were kept out from the ambit of wheat to prevent hoarding of stocks,’ according to an official note.

The government had imposed stock holding limits on wheat for the first time since 2008 for traders, wholesalers and retailers till March 31, 2024 last month to control increase in prices.

However, an official with a leading private company dealing with wheat products said that the limit of 100 tonne per buyer per region is a small quantity for those who want to go for bulk purchase.

A food ministry official said the FCI will continue to sell foodgrains from its surplus stocks till inflationary trend in cereals prices is curbed. The official said current grain stocks are above the buffer and sufficient to carry out open market sales.

As per earlier policy, the corporation had been selling surplus wheat to bulk buyers during the lean season (January-March).

It sold 3.37 MT of wheat under the scheme during February 1-March 15 through weekly auctions. The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.

In the past many years, the sale of rice through an e-auction has not received encouraging responses.

https://www.financialexpress.com/economy/fcis-rice-e-auction-gets-tepid-response/3197442/ QR Code

Published Date: August 3, 2023

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