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Government mulls selling wheat in open market

The government,grappling with storage space, may sell more wheat in open market to vacate godowns for accommodating the fresh harvest.

, ET Bureau|
Updated: Apr 28, 2012, 03.30 PM IST
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NEW DELHI: The government,grappling with storage space, may sell more wheat in open market to vacate godowns for accommodating the fresh harvest.

"We are concerned about the godowns flooded with grains.We may take up the case of releasing more wheat in open market under the Open Market Sales Scheme (OMSS) with the empowered group of ministers on food," said a food ministry official. If the panel of ministers decides in the favour of OMSS, it will bring respite to wheat flour millers in Punjab who are forced to source grain from other states to keep factories running.

The state-run Food Corporation of India (FCI), which buys almost the entire wheat production of Punjab,has stopped sales to millers for the last three months fearing recycling of last seasons wheat in the new marketing season.This has left the local industry with no grains despite good availability."

"Punjab is the largest wheat producer. FCI doesnt sell us wheat.Since private wheat companies like Glencore and Cargill are almost non-existent in the state,we are forced to source the grain from Uttar Pradesh. It looks ironical for the state which is tipped as the wheat basket of India producing over 115 million tonne of wheat," said Punjab Roller Flour Mill Association president Naresh Ghai.

Procurement by private companies has come down drastically in Punjab from 11.44 lakh tonne in 2006-07 to a mere 36,700 tonne in 2011-12. Government agencies don't sell wheat to flour millers fearing that the millers may resell the last seasons wheat at the existing minimum support price (MSP) of Rs 1,285 which is Rs 115 more than the last seasons MSP."

"We have state-wise quota for allocation of wheat to millers and other retailers under OMSS. We can't sell millers a quantity beyond that. Wheat sold during the new harvesting season may come back to us at a higher cost," said a food ministry official.

The annual requirement of wheat for around 80 flour mills spread across Punjab is 7 lakh tonne.Of this,the Centre allocates only 73,000 tonne to these millers under OMSS at Rs 1,170 per quintal out of over 15 lakh tonne released across the country.



 


"We had demanded one lakh tonne of wheat per month for Punjab from January till March as the crop availability in the state is usually low at this time.But the government released only 20,000 tonne for three months while it released 53,000 tonne in October last year," Ghai said.

He said the governments policy of providing a 50% freight subsidy to non-wheat producing states is making wheat products in Punjab highly non-competitive.

"The landing cost of wheat for flour mills in Karnataka and Andhra Pradesh is much lower than us.They get a 50% subsidy on transportation while we have to pay the full value which makes our input cost higher.The government should provide parity in this regard," he said.

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