Agri Commodities

Food Ministry Issues Guidelines For Open Market Sale Of Rice By FCI

The Food Corporation of India timely releases rice and wheat at fixed prices in the open market under Open Market Sales Scheme (OMSS). The release of crops is generally done to ensure surplus supply in the market amid the lean season to moderate the prices of wheat and Rice in the open market. 

On February 1, the GOI decided to sell around 3 million tonnes of wheat from the stock reserves maintained by the FCI. Recently, FCI has received the guidelines from the Food ministry of India to sell raw rice Grade ‘A’ and wheat to private traders via e-auction. 

The open market sale scheme (OMSS) for rice is for private traders, Union Territory Administrations, and State Governments as well as ethanol production companies. 

The quantity of rice to be sold in the open market from the FCI stock is not yet decided by the Food Ministry but the guidelines issued by the ministry consist of predetermined selling prices for different categories of purchasers. Private traders and exporters said that the Food ministry would give the hint in the agro export-import market regarding the increase in supplies and restrain the hike in rice prices in the global market. 

Retail Price Of Rice In The Market 

In December 2022, inflation in the retail prices of rice was observed where prices rose by approximately 10.49%. The price of rice again rose by 10.51% in January 2023. In 2020-21, the Food Corporation of India released around 2.49 million tonnes of rice in the open market. Based on discussions and meetings, the food ministry has conveyed to FCI that the selling price of rice to different states including fortified rice for distribution in the open market sales scheme is fixed at 3400/quintal. 

The Ministry has also set the reserve price of rice to be sold through e-auction as per the guidelines for the supply of ethanol production companies under the biofuel policy at 2,000 per quintal, while the price for private purchase has been set at 2,400 per quintal. 

Distribution Of Rice By FCI 

As per the guidelines issued by the Food Ministry of India, no private organization apart from ethanol production companies is allowed to purchase rice from FCI stock in grain surplus states including Haryana, Punjab, Andhra Pradesh, Chhattisgarh, Odisha, and Telangana amid the paddy procurement season. The open market sales scheme for rice is applicable in deficit procuring states of India like Bihar, Uttar Pradesh, and West Bengal. In the current year, 1.6 million tonnes of rice from the FCI stock is allocated to ethanol production. 

According to the biofuel policy approved by the National biofuel coordination committee ethanol is produced from damaged food grains such as broken rice, wheat, etc. which are not considered fit for human consumption. The buffer demand for rice for January 1 is 13.8 million tonnes but, FCI has 15.4 million tonnes of rice plus an additional 31.3 million tonnes of rice will be driven from the rice supplier

Meanwhile, nearly four months after the FCI and state government agencies began paddy procurement for the current kharif season (2022-23), the total purchase until Saturday was up 2% year on year at 64 MT. The free ration scheme implemented in April 2020-December 2022 has depleted the rice stock but now it is expected to boost after 2022. 

40 million tonnes of rice and 18 million tonnes of wheat are distributed by FCI under the National Food Security Act. Under this act, 5 kg of grain per head is distributed every month free of cost to almost 800 million recipients. 

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