Food inflation: Govt to release additional rice and wheat via open market to control price hike

The government on Wednesday announced the sale of additional 50 lakh tonnes of wheat and 25 lakh tonnes of rice from the Central pool in the open market to boost domestic availability and contain rising prices of these two key staples.

The government also reduced the reserve price of rice by Rs 2 per kg to Rs 29 per kg amid few takers for the commodity under the Open Market Sale Scheme (OMSS).

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On likely cut in wheat import duty, the government said it will take action based on the requirement in the future as things are dynamic and evolving.

State-owned Food Corporation of India (FCI) is selling wheat and rice from the Central pool to bulk buyers like flour millers and small traders under the OMSS since June 28 through an e-auction.

Briefing media, Food Secretary Sanjeev Chopra said, "Prices of two commodities have been in the news for the past couple of months because of the rising trend that we are noticing".

The offtake of wheat under the OMSS has been good so far. However, the weighted average price of wheat has been going up in the past two-three auctions. In rice, there has not been much offtake, he said.

Chopra said the government felt that tweaking the reserve price of rice may bring better results.

"The government has decided to offload 50 lakh tonnes of wheat and 25 lakh tonnes of rice in the open market through the OMSS," he said.

This is over and above 15 lakh tonnes of wheat and 5 lakh tonnes of rice sales announced under the OMSS on June 28.

That apart, the secretary said the government has reduced the reserve price of rice by Rs 2 per kg to Rs 29 per kg from Rs 31 per kg.

The reserve price of wheat, however, has been kept unchanged as there is a good response from the traders under the OMSS.

About 7-8 lakh tonnes of wheat was auctioned under the OMSS so far, while rice sale was negligible, he said.

The government is hoping that these measures would not only improve the availability in the market but also help cool down the prices and control food inflation, Chopra added.

"...Based on the response in the next few weeks, we will keep tweaking them. The ultimate objective is to keep the food inflation under check," he said, adding that the government has adequate stock available for more aggressive auctions if required.

On the likely reduction of wheat import duty, the secretary said, "Right now, we have taken these steps. These are dynamic and evolving. Based on requirements in the future, we will take action".

He also said that the Centre is aggressively following up with states to ensure stock limits in wheat are not violated.

Sharing about the sale of foodgrains under the OMSS, FCI Chairman and Managing Director Ashok K Meena said the OMSS operation was started early this year on June 28, in view of the increasing trend of wheat and rice prices.

Till now, seven e-auctions were conducted, including today's. Initially, wheat offered for sale used to be 4 lakh tonnes and now, it has been reduced to 1 lakh tonne in today's e-auction. About 8 lakh tonnes of wheat has been sold till date, he said.

The FCI CMD also said that initially, the weighted average selling price of wheat on June 28 was Rs 2,136.36 per quintal, which has now gone up to Rs 2,254.71 per quintal in today's e-auction.

"This shows there is an increase in the market demand for wheat," he noted.

About six e-auctions for rice have been conducted since July 5 but the offtake has not been up to the mark most likely because of the high reserve price, which is at Rs 31.73 per kg, he added.

"In today's e-auction, about 1,500 tonnes of rice has been sold under the OMSS," he said.

FCI has adequate food grains stocks. It has additional 87 lakh tonnes of wheat and 217 lakh tonnes of rice available over and above the buffer norms, he added.