Food Corporation of India sold 3.85 LT wheat in the second round of the e-auction
Food Corporation of India (FCI) sold 3.85 lakh tonnes (lt) of the 15.25 lakh tonnes (lt) of wheat offered for sale in the open market from official inventories during the second round of the e-auction held on February 15.
The Food Ministry said in a statement Thursday that the weighted average price in the second round was ₹2,338.01/quintal. In the first round, the average realized price was ₹2,474 per quintal.
This Monday, the government announced a ₹23/kg Under Relaxed Specifications (URS) category and a ₹ 23.50/kg Fair Average Quality (FAQ) quality that is uniform across the country. Before, the freight cost from Bhopal or Ludhiana to the depot was included in the reserve rates.
The offtake has decreased from 42% in the first round to 25% in the second round, which traders attributed to the early arrivals of fresh harvest. In the second round of the auction, 1,060 traders/millers participated, compared to almost 1,150 bids in the first round.
‘The government anticipated a ₹2/kg fall in the sale price for cooperatives. However, because the weighted average has dropped by 1.36/kg in the current auction compared to the first round, any additional action may assist the government in further lowering prices,’ said a former FCI Chairman. The government is rumoured to be lowering reserve prices by ₹2/kg in the next round of e-auction.
Food Secretary Sanjeev Chopra previously stated that given the policy decision, ‘the government would take and is taking,’ wheat prices would fall further in the coming weeks.
Last week, the Food Ministry reduced the price of wheat for sale to NCCF/NAFED/Kendriya Bhandar/States, as well as community kitchens/charitable/NGO participating in relief operations/running relief camps for migrant laborers/vulnerable populations, to ₹21.50/kg from ₹23.50/kg. This subsidy is only available if the entire wheat crop is processed into atta and sold at an MRP of $27.50 per kg. Before, the maximum price for atta was ₹29.50/kg. The economic cost exceeds ₹25/kg.
According to the ministry, the second round of e-auction saw the highest demand of 100-499 tonnes, followed by 500-1000 tonnes and 50-100 tonnes, showing that small and medium wheat millers and dealers actively participated in the sale. For the maximum quantity of 3,000 tonnes at one time, only 5 bids were submitted.
To combat rising wheat and atta prices, the government has determined that FCI will sell wheat through e-auction throughout the country every Wednesday until the second week of March.
In addition to the 25 lt set aside for the e-auction, the government has offered 5 lt to states, cooperatives, and small traders to lift wheat at reserve rates without taking part in the e-auction. The National Cooperative Consumers’ Federation of India Limited (NCCF) has been granted permission to lift 68,000 tonnes, NAFED 1 tonne, and Kendriya Bhandar 1.32 tonne.