Markets

FCI to refrain from open market sales this year

The Food Corporation of India’s (FCI) grain stocks will plunge to a 6-year low by October, thanks to the extension of Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) till September 30 and a sharp drop in wheat procurement in the current season.

The low surplus would prevent the corporation from open market sales in the current fiscal year, bucking the trend of recent years.

The government placed curbs on exports of wheat in May, even as the global markets looked very remunerative to exporters. The move was in view of local supply constraints.

Sources told FE, by October 1, FCI’s food grains stock is anticipated to dip to 38. 92 million tonne (MT) against the buffer of 30.75 MT. This means that the surplus stocks could be just 1.2 MT of wheat and 6.97 MT of rice after meeting grain requirements under PMGKAY and National Food Security Act.

This is expected to be the lowest stock FCI had held since 2016, when the corporation’s grain stock had dipped to 35.8 MT on October 1.

In 2021-22, FCI had sold 2.53 MT (wheat) and 2.49 MT (rice) under OMSS. In the current year, because of lower procurement of wheat, OMSS has been discontinued.

In the current Rabi marketing season (April-June) for 2022-23, the wheat procurement dropped by more than 56.6% to only 18.78 MT against 43.34 MT purchased from the farmers in the previous year.

A decline in production because of heat waves during the flowering stage of the crop is attributed to this fall in wheat procurement.

In May, the government had revised the norms for phase VI of PMGKAY, by providing more rice instead of wheat. FCI has allocated 3.5 MT of wheat to states. As per the earlier norm, FCI was to supply 9 MT of grain.

Rice allocation during May-September, 2022 for PMGKAY, was revised to 16 MT against the earlier norm of 10.8 MT. This move to allocate more rice than wheat came after wheat stock held with FCI as of May 1 dropped to a five-year low of 31 MT on May 1.

Launched in 2020 as part of the Covid-19 relief measure, under the PMGKAY, 5 kg of grains are distributed to 810 million beneficiaries every month, These people also get highly subsidised foodgrain under National Food Security Act.

As on July 1, FCI has grain stock of 59.1 MT against a norm of 41.12 MT. In the current marketing season for 2021-22 (October-September), close to 58 MT of rice has been purchased from the farmers.

However, higher allocation of rice under PMGKAY in proportion to wheat has resulted in decline in stocks.

The NFSA beneficiaries include around 25 million Antyodaya Anna Yojana households, which constitute the poorest of the poor. They are entitled to 35 kg per household per month at subsidised prices.

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