Unfriendly policies and a lukewarm response to wheat sales through national spot exchanges have forced the Food Corporation of India (FCI) to consider lowering the minimum stipulated quantity to sell the commodity under the Open Market Sales Scheme (OMSS) to 10 tonnes from the current 100 tonnes. The move is aimed to attract participation from small traders.
A source familiar with the development said: “The decision is almost finalised and will be notified soon.”
FCI chairman Siraj Hussain, in a recent meeting with Business Standard, had hinted that the corporation was liberalising warehousing policies to make them industry-friendly. The policy will be liberalised to the Central Warehousing Corporation (CWC) standard, which is sufficient to attract participation from small traders.
Currently, a minimum quantity of 100 tonnes is stipulated for selling wheat through spot exchanges under OMSS. But, the price fixed by the government is higher than the spot price. So, it is not economically viable for millers to buy wheat under OMSS.
Financial Technology-promoted National Spot Exchange (NSEL) sold about 2,400 tonnes in three auctions, while National Commodity and Derivatives Exchange-promoted NCDEX Spot could not participate in the wheat tender.
“The idea is to bring small flour millers, with a capacity to the tune of 10 tonnes, under the FCI sales scheme. Owing to their lower capacity, they have been barred from participating in OMSS tenders. Through this approach, FCI will be able to sell more wheat and prices of processed wheat products, including flour, sooji (semolina) and maida (processed flour), may come down in the open market,” sources said.
Early last month, NSEL had urged the corporation to consider lowering down the minimum stipulated quantity, so that small flour millers with a capacity of 10 tonnes could participate. FCI, however, allows lifting of a minimum three tonnes and maximum of nine tonnes from one depot at one point of time after showing their identity proof. But, if small flour millers want to lift more than nine tonnes in one day from one location, they need to participate in tenders.
In many cases, however, flour mills could not buy directly due to the absence of FCI godowns in the nearby location.
“This is a welcome move”, said Anjani Sinha, managing director and CEO of NSEL, adding, “Majority of our members, who were barred from direct participation in FCI tenders, will now be able to procure as much wheat as they want.”
NCDEX Spot Head Rajesh Kumar Sinha said, “The move will attract more participation, which will yield in competitive bidding price.”
