Nafed to increase wheat supply

The National Agricultural Cooperative Marketing Federation (Nafed) will sell about 1.5 lakh tonnes of wheat in the open market to increase supply during the months of September and October.

During these months, there is a festive demand for wheat and an additional supply in the market would have a stabilising effect on the market prices of the commodity, which usually shoots up during the season.

The federation had purchased this wheat from states like Uttar Pradesh, Rajasthan and Bihar in the 2007 rabi season. While this purchase was done as a part of its commercial operations, the federation had bought another 2 lakh tonnes at a minimum support price (Rs 850 per quintal) on Food Corporation of India's account for the latter's public distribution system requirements.

"Though we had offered the entire quantity of wheat to government before it finalised the purchase of 5.11 lakh tonnes in July at an average rate of $325 (Rs 13,162) per tonne, it was not accepted by the government as our price (at Rs 10,300-10,400) was higher than the minimum support price," said a senior Nafed official.

However, the government could have saved Rs 27.9 crore had it purchased this 1.5 lakh tonnes wheat from Nafed instead of importing at high rates. Had the government bought 1.5 lakh tonnes of the 5.11 lakh tonnes from the federation at Rs 1,030 a quintal, and transported it to Southern states, each tonne of this wheat would have reached the Southern markets at a cost Rs 1,130 a quintal as against the imported price of Rs 1,316 a quintal, thereby saving Rs 186 on every quintal and Rs 27.9 crore overall.

The government's decision to import wheat at such high rates had also pushed up open market prices from Rs 950 to Rs 1,025-1,030 a quintal over the last one month.