A day before the next round of auction to sell 11.72 lakh tonnes (lt) of wheat, the government on Tuesday announced that 20 lt of additional grain would be released in the market to further tame prices. Out of 25 lt earmarked for sale through e-auction, as much as 12.98 lt has already been sold out.

“So far, it has been decided to offload 50 lt (30 lt+20 lt) of wheat under the open market sale scheme (OMSS). The reduction in reserve price along with additional offloading of 20 lt will collectively help in reducing market price of wheat and wheat products for consumers,” the food ministry said in a statement. The first round of auction was held on February 1.

Read also: For the second time in a week, Centre cuts reserve prices of wheat

The all-India average retail price of wheat has declined to ₹33.15/kg from ₹33.47/kg in last three weeks whereas its wholesale price has dipped to ₹2,958.23/quintal as on February 20 from ₹3,003.46/quintal on January 30, according to Consumer Affairs Ministry data. Atta prices have declined to ₹37.63/kg from ₹38.02/kg in retail market, and to ₹3,310.30/quintal from ₹3,346.53/quintal in wholesale.

The ministry also said that the Food Secretary Sanjeev Chopra held a virtual meeting with officials of Food Corporation of India (FCI) and representatives of flour millers’ association on Tuesday and reviewed lifting of stocks as 3.84 lt got sold in the second round of e-auction. The government wants all the stocks should be ideally lifted within two weeks from the day results got announced.

Chopra is also believed to have advised flour millers to bring down prices of atta and other products in line with the reduction in market prices of wheat.

Government’s stern message

When pointed out that millers and traders have made losses of about ₹120 crore due to frequent changes in price policy of OMSS, the secretary told them to average out their sale price, said a source present in the meeting. But, the government sent a stern message to traders and millers that it would take further steps if atta prices do not fall, sources said.

Asked if the government indicated further cut in the reserve price, which is almost at par with the minimum support price, the source said any such decision depends on the results of the e-auction scheduled Wednesday. “If the offtake falls from the second round level, the government may do another price revision on Friday,” the source added.

Sources in the private trade said that the government wants to bring down wheat’s mandi prices below the MSP so that farmers sell their produce to FCI.

The ministry on February 17 reduced reserve prices of wheat by ₹2/kg. Accordingly, reserve prices are ₹2,150/quintal for fair average (FAQ) quality and ₹2,125/quintal for Under Relaxed Specifications (URS) category during the third round of e-auction to be held Wednesday. Earlier on February 10, government had fixed the reserve prices of wheat at ₹2,300/quintal for URS and ₹2,350/quintal for FAQ quality, uniform all across the country, changing the previous rates which were also included additional freight costs from Bhopal or Ludhiana till the depot.

Inflation control

At a post-Budget discussion with stakeholders in Jaipur on February 20, Finance Minister Nirmala Sitharaman had said that the government would continue to focus on controlling inflation for which several steps have already been taken. After two months of easing, retail inflation based on Consumer Price Index (CPI) breached the RBI’s upper tolerance level and surged to 6.5 per cent in January against 5.72 per cent of December. A key reason for the rise is higher price of cereals combined with spices and other food products.

Now that a total of 45 lt will be sold through e-auction, while the quantity earmarked for cooperatives and State governments for directly lifting at reserve prices would remain at 5 lt. With a cap of maximum 3,000 tonnes per bidder to lift through the e-auction scheduled weekly, the government wants wheat be well distributed across the country.

The food secretary has also been informed by traders that due to cheap rates, breweries has started some lifting which should be stopped, sources said.

Related Topics
comment COMMENT NOW