The government has barred participation of traders in the next round of e-auction of wheat, scheduled for July 19, after realising that its open market sale policy is helping only middlemen and there was no visible reduction in retail prices for which the scheme was started. There is also a substantial reduction in quantity offered for sale from 4.18 lakh tonnes (lt) in the last round to 1.83 lt now.

The quantity had to be reduced as a large section will not be participating, said an official, after there was a 56 per cent reduction in wheat offered for sales in the fourth round of e-auction. The current offer has been based on the offtake seen in last week’s auction. So far, the government has sold 3.93 lt of wheat since June 28 through the weekly e-auction. On June 12, Food Secretary Sanjeev Chopra announced the plan to sell 15 lt of wheat from Central Pool stock in the first phase and said that it would be raised further if required.

Rising prices

The main objective of open market sale is to increase the availability of the grain and reduce its prices in retail market. While offtake was rising in every round from previous auction, the prices started inching up. The wheat offtake was 21 per cent in first round and 42 per cent in third round of auction.

According to data maintained by the Consumer Affairs Ministry, the all-India average retail price of wheat in June increased to ₹31.67/kg from ₹31.27/kg in May and now the average price this month has further shot up to ₹31.99/kg. Similarly, atta prices were ₹36.42/kg in May, ₹36.95/kg in June and ₹37.16/kg during July 1-14.

“The change in the guidelines was necessitated after the results of third round showed an increase in average rate despite the claim of allowing actual users’ participation through the capping clause at 100 tonnes. Unless the government addresses the basic issue of higher physical availability in the market more realistically, and not through policing methods like stock limit, the prices may not be contained,” said an industry expert.

The average sold out price in FCI’s third round of e-auction was more than ₹2,150/quintal, whereas the during the previous two rounds the rates were ₹2,136 and ₹2,137.

There seems to be a scarcity in market as the highest selling rate of ₹2,245/quintal was reported from Uttarakhand, which is a wheat growing State, traders said. Even at ₹2,170/quintal in Uttar Pradesh and ₹2,189/quintal in Rajasthan, the rates were on higher side when compared to consuming States like Kerala, Karnataka or Tamil Nadu, the traders said.

Yadav Foods has offered to buy at ₹2,285/quintal from FCI’s Haldwani depot in Uttarakhand, which is the highest rate among all the States, trade sources said. Even in Delhi, as many as 65 out of 90 successful participants had offered to buy wheat at ₹2,200/quintal or more. But, allocation in the fourth round for Uttarakhand has been reduced by a half of its offtake in last round whereas same quantity has been maintained in Delhi, traders said.