The Department of Food and Public Distribution (DFPD) has announced a reduction in the reserve price for wheat under the Open Market Sale Scheme (Domestic) to combat inflation in the food economy. The new reserve price is set at Rs 2150/Qtl for wheat (FAQ) and Rs. 2125 Qtl for wheat (URS), and states may purchase wheat from FCI for their own schemes at the proposed reserve prices without participating in e-auctions. The FCI will conduct a third e-auction for the sale of wheat at these revised reserve prices on 17.02.2023.
Overview
The Department of Food and Public Distribution (DFPD) has taken measures to combat the rising inflation in the food economy by reducing the reserve price for wheat under the Open Market Sale Scheme (Domestic) until March 31, 2023. Wheat has been sold at a reduced rate of Rs. 21.50/Kg to various organizations, including NCCF/NAFED/ Kendriya Bhandar/State Govt. Cooperatives/ Federations, community kitchens, charities, and NGOs, provided they convert the wheat to atta and sell it to consumers at MRP Rs. 27.50/Kg.
The reduction in the reserve price of wheat is likely to reduce the market price of wheat and wheat products for consumers, which could increase the demand for wheat and thereby, increase the price of wheat in the market. This could lead to better prices for the wheat sold by farmers. The allocation of wheat to State Governments and Government PSUs/cooperatives/Federations without e-auction is expected to provide more opportunities for farmers to sell their produce directly to these entities. Finally, the reduction in the rate of wheat for sale to NCCF/NAFED/Kendriya Bhandar/State Govt. Cooperatives/Federations and community kitchen/charitable/NGO could help in increasing the demand for wheat, which could lead to better prices for farmers.
Important points
- The Department of Food and Public Distribution has reduced the reserve price for wheat under the Open Market Sale Scheme (Domestic) to Rs. 2150/Qtl for wheat (FAQ) and Rs. 2125/Qtl for wheat (URS) until 31st March, 2023.
- Without participating in e-auctions, states can purchase wheat from FCI at the proposed reserve prices.
- FCI will hold its 3rd e-auction on 22nd February, 2023 for the sale of wheat at the revised reserve prices.
- 30 LMT of wheat from FCI’s stock will be released through the Open Market Sale Scheme (OMSS).
- 25 LMT will be offered through the e-auction route, 2 LMT to state governments, and 3 LMT to Govt PSUs/cooperatives/Federations without e-auction.
- On February 10, 2023, the price of wheat was lowered to Rs. 21.50/kg for sale to various organizations and groups, subject to the condition that they will sell it to consumers at MRP Rs. 27.50/kg after converting it to atta.
Conclusion
The Indian government’s decision to reduce the reserve price of wheat and release 30 LMT wheat from FCI stock through Open Market Sale Scheme (OMSS) will benefit farmers by providing them with better market access and higher prices for their crops. The reduction in the reserve price of wheat will also help in reducing the market price of wheat and wheat products for consumers, which is a win-win situation for both farmers and consumers. Furthermore, the allocation of wheat to various government and non-government entities for conversion to atta and sale at MRP will not only help in reducing food inflation but also ensure that farmers receive fair prices for their produce.
