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FCI to start open market sales soon.
Jan 12, 2023

India’s wheat production in the current crop year (2022-23) is likely to touch a record 112 million tonne (MT), an increase of around 5% compared to the previous year, thanks to favourable weather conditions, higher acreage and sowing of climate resilient varieties. Meanwhile, the FCI has decided to undertake open market sale of 2 – 2.5 MT of wheat to the bulk buyers such as flour millers, this month to curb rising prices of the grain. Sources told FE the finance ministry approval for these sales is expected soon.

With higher productions easing concerns over the stocks, the ban on exports of the grain may be up for review in March. India banned wheat exports for ensuring domestic supplies in May last year. Wheat retail inflation rose by 17.6% in November 2022 on year.

Following the government decision to discontinue the free ration scheme from December 31, 2022, the FCI is likely to have 3 MT of surplus wheat stock by the end of the current fiscal against the buffer.

As per latest assessment, the wheat stocks held with FCI by April 1, 2023 would be a comfortable 11.3 MT against a buffer of 7.4 MT.

'Sowing of climate resilient varieties, favorable weather conditions currently prevailing and slightly higher acreage under wheat may lead to this year’s wheat production to reach a record 112 MT,' Gyanendra Singh, Director, Indian Institute of Wheat and Barley Research, a Karnal-based institute affiliated to the Indian Council for Agricultural Research, told FE. Singh said that the production may even surpass the 112 MT mark if favorable weather continues till March end.

In the current season, area under wheat has touched 33.2 million hectare (MH), against the last five year average sown area of 32.4 MH as per the data released by the agriculture ministry last week. Wheat, a key rabi or winter crop, is mostly grown in Punjab, Haryana, Rajasthan, Uttar Pradesh and Rajasthan.

Last crop year (July-June), a sudden rise in temperature in March pulled down the output mainly of late sown crop. 'However, the chances of a repeat of last year’s phenomenon of spike in temperature in March, considered as the grain filling stage of the crops, is unlikely to occur based on experience and views from India Meteorological Department,' Singh said.

Climate resilient varieties such as DBW187 and DBW 303 recommended for nearly 75% of the wheat grown area of around 33 MH, can withstand sudden change in temperature and farmers across all the key growing states have been using the varieties. Wheat output in the 2021-22 crop year, as per the agriculture ministry, has declined by around 3% on year to 106.8 MT because of heat waves during the flowering stage of the crop in March.

Due to lower production and higher global demand, Food Corporation of India (FCI)’s procurement in the 2022-23 marketing season fell by more than 56.6% to only 18.8 MT against 43.3 MT purchased from the farmers in the previous year.

The FCI had earlier stopped sale of wheat in the open market from its stocks for the first time more than a decade in view of a sharp drop in procurement in 2022-23 rabi marketing season and additional allocations of the grain under the free ration scheme.

The FCI has fixed Rs 2250 a quintal (excluding transportation cost) as the open market sale scheme (OMSS) price. The FCI’s open market sales stood at 7 MT in 2021-22.

'We would like to keep wheat prices under check, prior to the commencement of procurement season which begins from April 1, 2023,' an official said. The MSP announced for wheat to be procured during 2023-24 marketing season (April-June) is Rs 2125/quintal.

Sources said that if the mandi prices of wheat prevail far above the MSP, it would adversely impact the government’s MSP procurement drive. According to the department of consumer affairs’ price monitoring cell data, the modal retail price of wheat and flour (atta) on Saturday rose to Rs 28/kg and Rs 35/kg, respectively, fromRs 22/kg and Rs 28/kg six months ago.

financialexpress.com

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