 "Traders not impressed as sale prices higher than global rates")
The Food Corporation of India (FCI) has invited bids for sale of almost 950,000 tonnes of wheat from its own stocks at a floor price of Rs 1,484 per quintal non-inclusive of transportation from Punjab and Haryana. The wheat is meant for export under the Open General License (OGL).
The wheat, which is almost two years old was procured in 2011-12 crop marketing year that concluded on March 31, 2012. According to an official statement released today around 409,826 tonnes of wheat has been offered for export from FCI warehouses in Haryana, while around 540,000 tonnes has been offered from Punjab-based warehouses.
This is the first time that FCI has invited bids from private traders for export of wheat stored in its warehouses. Earlier, only state-run trading companies like STC, PEC and MMTC were allowed to sell wheat from FCI godowns. In total, the government plans to export around 5 million tonnes of wheat through this method.
Earlier, it has managed to export another 4.5 million tonnes of wheat also from its stocks, but that was all through state-run trading firms. The exports have been necessitated because the corporation is carrying a record stocks of almost 60 million tonnes of foodgrains as on April 2013 as against the required 21.2 million tonnes.
Out of this wheat stocks are estimated to be around 24.2 million against the buffer stocks and strategic reserve requirement of 7 million tonnes, rice stocks are estimated to be around 35.4 million tonnes as against a requirement of 14.2 million tonnes.
The foodgrains stocks are expected to swell to a mammoth over 92 million tonnes by end of June as the government plans to purchase another 44 million tonnes in the new procurement season that has started from April 1, 2013. However, leading traders and private companies are not enthused by the move to liquidate wheat stocks at such high prices.
“There is very distinct possibility of many traders participating in the new tender as the terms and conditions are absurd,” a senior official from a leading multinational grain trading firm said. He said the biggest reason for this is that there is no price parity between the rate at which government is liquidating its stocks and the international prices.
“Wheat in global markets is now priced at below $300 per tonne, while the total cost of purchasing wheat from government stocls (Rs 1,484 per quintal plus transportation charges and other incidentals) is somewhere around $320 per tonne. So who will purchase two-year old wheat at a higher price and export it at less price,” the official explained.
He said to encourage private participation in export of wheat from state-run godowns; the government should reduce the price at which it offers this wheat.
The wheat, which is almost two years old was procured in 2011-12 crop marketing year that concluded on March 31, 2012. According to an official statement released today around 409,826 tonnes of wheat has been offered for export from FCI warehouses in Haryana, while around 540,000 tonnes has been offered from Punjab-based warehouses.
This is the first time that FCI has invited bids from private traders for export of wheat stored in its warehouses. Earlier, only state-run trading companies like STC, PEC and MMTC were allowed to sell wheat from FCI godowns. In total, the government plans to export around 5 million tonnes of wheat through this method.
Earlier, it has managed to export another 4.5 million tonnes of wheat also from its stocks, but that was all through state-run trading firms. The exports have been necessitated because the corporation is carrying a record stocks of almost 60 million tonnes of foodgrains as on April 2013 as against the required 21.2 million tonnes.
Out of this wheat stocks are estimated to be around 24.2 million against the buffer stocks and strategic reserve requirement of 7 million tonnes, rice stocks are estimated to be around 35.4 million tonnes as against a requirement of 14.2 million tonnes.
The foodgrains stocks are expected to swell to a mammoth over 92 million tonnes by end of June as the government plans to purchase another 44 million tonnes in the new procurement season that has started from April 1, 2013. However, leading traders and private companies are not enthused by the move to liquidate wheat stocks at such high prices.
| Wheat offered for export from FCI stocks to private traders | |
| Rohtak | 20,000 |
| Hisar | 3,04,796 |
| Karnal | 85,030 |
| Punjab | 540,000 |
| Total | 949,826 |
| Source: Government of India | |
“There is very distinct possibility of many traders participating in the new tender as the terms and conditions are absurd,” a senior official from a leading multinational grain trading firm said. He said the biggest reason for this is that there is no price parity between the rate at which government is liquidating its stocks and the international prices.
“Wheat in global markets is now priced at below $300 per tonne, while the total cost of purchasing wheat from government stocls (Rs 1,484 per quintal plus transportation charges and other incidentals) is somewhere around $320 per tonne. So who will purchase two-year old wheat at a higher price and export it at less price,” the official explained.
He said to encourage private participation in export of wheat from state-run godowns; the government should reduce the price at which it offers this wheat.