The Hindu Business Line : FCI scheme may push up wheat price

WHEAT prices in the open market are likely to rule higher in the short term, thanks to the new wheat sale scheme announced by the Food Corporation of India (FCI) from January 1, 2004, market sources have said.

Wheat prices (mill quality) in the open market have already gone up by about 25 per cent to nearly Rs 1,000 per quintal, from Rs 800 per quintal few days ago, they said.

"Prices are expected to rule higher in the next few days, thanks to FCI's new wheat sale scheme," a local trader said. "Under the new scheme, any party purchasing one rake (nearly 3,000 tonne) or above of wheat, paying an advance of 25 per cent, is being delivered the wheat on first-come basis at the rate of Rs 780 per quintal at destinations," Mr Kanhaiyalal Gidwani, a member of MLC (Maharashtra) and the convenor of Shiv Sena's committee on essential commodities, told Business Line.

"FCI has huge stocks of wheat. The new scheme floated by the corporation seems to be for the benefit of the financially strong purchasers. As a result of this new scheme, open market rates have gone up significantly and if this scheme is not stopped, further increase in prices cannot be ruled out. It will greatly affect the common man," Mr Gidwani said.

"Wheat sold under the open market scheme is below economy cost and the Government is giving huge subsidy. This subsidy must be passed on to the consumer and not to financial investors," he said.

"We have immediately requested the Ministry of Consumer Affairs, Food and Public Distribution that about five lakh tonnes of wheat in the open market be made available in Maharashtra to end to the reported false shortage and control the situation," Mr Gidwani said.

"With this new scheme and price rise in the open market, the situation will only worsen. Ten districts of Maharashtra have been declared drought-affected," he said.