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New Delhi, Aug. 21 The Union Government, on Thursday, approved a new open market sale scheme (OMSS) for wheat and rice in order to keep grain prices in check ahead of the upcoming festival season.

The Cabinet Committee on Economic Affairs (CCEA), at its meeting here, decided to allocate wheat under the OMSS both to State Governments/Union Territories as well as bulk consumers, such as roller flour mills.

“We plan to channelise about 50 lakh tonnes (lt) of wheat under the scheme between September and March next.

Another 10 lt will be allocated to States/UTs as additional above-poverty-line (APL) quota”, a senior Food Ministry official said.

The exact distribution of the overall 50 lt OMSS quantities between the States/UTs and bulk consumers, and also the timing of intervention and locations, will be decided by the Ministry based on the recommendation of a Committee of Secretaries (CoS).

The official said that the OMSS releases to State/UT Governments will be undertaken at prices not lower than the minimum support price (MSP) plus cost of transportation from Ludhiana (Punjab) to the concerned State/UT capital.

“In the case of wheat, it will roughly work out to Rs 10.30 per kg in Delhi and Rs 12 per kg in Thiruvananthapuram. The States may add about a rupee to this to take care of local distribution costs”, he added.

As far as sales to bulk consumers are concerned, this would be done strictly through a process of open tendering by the Food Corporation of India (FCI). Based on the tender quotes, the FCI’s High-Level Committee would take a decision on the price at which the sale is to be done.

The OMSS scheme will basically allow the Centre to sell wheat and rice at prices between the prevailing APL and open market rates.

Currently, the APL issue price is Rs 6.10 per kg for wheat, Rs 7.95 per kg for common rice and Rs 8.30 per kg for Grade ‘A’ rice. On the other hand, wheat is retailing between Rs 13 per kg in Delhi and Rs 17 per kg in Chennai, with rice generally selling for Rs 18-22 a kg.

“Under the new scheme anybody can buy grain from cooperative and Government stores without having a ration card. The idea to create price points between the APL and market prices, so as to keep the latter under check and minimise leakages inevitable under the regular, super-subsidised public distribution system”, the official pointed out.

While the CCEA’s approval for the new OMSS policy covers both wheat as well as rice, the official admitted that the FCI’s stocks are not adequate to enable the scheme to be undertaken in the latter.

As on July 1, wheat stocks in the Central pool, at 249.12 lakh tonnes (lt), were way above the normative minimum buffer of 171 lt for that date. On the other hand, rice stocks of 112.49 lt were marginally more than the corresponding 98 lt buffer norm.

“On rice, we can take a call only after a definite picture of the size of the kharif crop is available. And that will happen only after the new marketing season begins in October”, the official noted.

During the ongoing 2007-08 marketing season (October-September), the FCI and State agencies had, as on Thursday, procured 267.44 lt of rice. This is as against the 251.07 lt bought in the entire 2006-07 season and the record 276.56 lt for 2005-06.

Wheat and rice have respective weightages of 1.38408 and 2.44907 per cent in the all-commodities wholesale price index (WPI). Keeping a lid of their prices is crucial for the Government at a time when the annual WPI-based inflation rate hit a 16-year-high of 12.44 per cent for the week ended August 2.

More Stories on : Wheat | Agricultural Policy | Rice

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