Bumper crop may start wheat’s open market sale

With wheat stocks exceeding buffer norms and fresh crop likely to surpass last year’s output, the government may resume open market sale to moderate consumer prices.

With wheat stocks exceeding buffer norms and fresh crop likely to surpass last year’s output, the government may resume open market sale to moderate consumer prices.

A Committee of Secretaries recommended a fortnight ago that the Open Market Sale Scheme — which was discontinued last April — be restarted this fiscal year with release of 5 lakh tonnes as and when market prices start firming up.

“The release would be used to send a signal to the market to subdue the prices,” said a government official. Retail prices raised concern last year with jumps of Rs 4 to Rs 16.5 per kg. They sobered a little on arrival of imported wheat.

Story continues below this ad

Under OMSS, any person or firm may purchase a minimum 10 tonnes from the Food Corporation of India if it has stocks in excess of the three-month demand for public distribution system and food-linked welfare plans.

Food Ministry officials told the CoS that stocks end-March would be in excess of 45 lakh tonnes, of which 40 lakh tonnes would need to be set aside as buffer requirement for unforeseen exigencies and to provide for PDS and welfare schemes.

However, sources said, a decision to allow OMSS of the extra 5 lakh tonnes would be taken end-February after assessing the weather conditions. Warm weather could shrivel the crop, leading to lower than estimated output.

Though India is comfortably placed for the coming fiscal year with an additional 1 lakh hectares of net sown area and prospects of wheat output reaching the target of 74 million tonne, prices could harden in the medium-term as global availability shrinks because of a drought in Australia.