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The Department of Food and Public Distribution has reduced reserve prices of wheat sold from the official stock by ₹2/kg further to check food inflation. The decision which came within seven days of the first such announcement will likely help the government to contain food subsidy and ensure adequate procurement this year.
“The reserve prices under Open Market Sale Scheme (Domestic) have been fixed at ₹2,150/quintal for fair average (FAQ) quality and ₹2,125/quintal for Under Relaxed Specifications (URS) category in the e-auction until March 31,” the Food Ministry said in a statement.
Earlier on February 10, the government cut the reserve prices to ₹2,300/quintal for URS and ₹2,350/quintal for FAQ, uniform across the country. Earlier, freight cost from either Bhopal or Ludhiana till the depot was getting added in the reserve prices.
The government has so far sold over 13 lakh tonnes (lt) of wheat from the official reserve out of 22 lt offered for sale through e-auction in the first two rounds. The remaining quantity will be sold until mid-March. The Food Corporation of India (FCI) has floated the tender for the third round of e-auction Friday at the revised reserve prices on which will be opened on February 22.
The Ministry said States are allowed to purchase wheat from FCI for their own scheme at the revised reserve prices without participating in e-auction. “Reduction in reserve price will help in reducing the market price of wheat and wheat products for consumers,” it said.
‘Govt intentions’
“Every government does the same thing as we have been witnessing. It is always farmers who sell their potatoes at cheap rates and traders take the maximum profit by keeping the crops in cold storage and selling those until next crop arrives,” said VM Singh, president of MSP Guarantee Morcha. He said farmers will benefit only when there is legal guarantee of the minimum support price (MSP).
However, some experts said since the MSP of wheat for the ensuing crop is ₹2,125/quintal, keeping the reserve price at the same level indicates that it wants procurement to take place at the benchmark rate. The Food Secretary earlier this week had boasted that the decision to offload wheat in open market from official reserves has brought down its prices below ₹2,500/quintal.
In Madhya Pradesh, the average mandi price was ₹2,491/quintal and in Uttar Pradesh ₹2,682/quintal so far this month, according to Agmarknet portal. These two States have maximum crop from last year.
The government had procured 187.92 lt of wheat from the 2021-22 crop year against 433.44 lt a year earlier as the yield dropped following an unusual heat wave during March. The Food Ministry is likely to assess on March 1 the procurement target for the season staring April at a meeting with State government officials.
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