Home BusinessFCI to sell wheat on bourses, may boost capacity use by mills
The government’s move to sell wheat through the country’s two leading online trading platforms will help mills, which are operating at less than 40 per cent capacity due to lack of availability of wheat and the government’s stock limit regulation.
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The government’s agri commodities trading agency, the Food Corporation of India (FCI), has engaged the NCDEX Spot Exchange (NSPOT), an online spot trading arm of the NCDEX, and the National Spot Exchange Ltd, a spot trading platform promoted by the MCX, to sell wheat under the open market sales scheme in Karnataka, Andhra, Haryana and Delhi. This is the first time FCI has hired a private agency to sell wheat.
The government has decided to sell 0.5 million tonnes (MT) wheat through these pilot auctions. If these go well, the system would be used to sell another million tonne of wheat, said Rajesh Kumar Sinha, head, NCDEX Spot Exchange Ltd.
There are 1,200-1,300 flour mills in the country that need about 7 MT wheat a year for sooji (semolina) and maida (wheat flour) production. They are currently procuring wheat through open market sales at Rs 1,200-1,500 a quintal.
“Now, online trading will help us procure wheat in line with our operational requirement at a stable price, which will translate into a more stable price of maida and sooji. It is a welcome step,” said Maharashtra Roller Flour Mills Association President Gopal Lal Seth Mohata.
This is also expected to lead to other public sector units such as State Trading Corporation and National Agricultural and Cooperative Marketing Federation, who are key players in various agri-commodities, taking the online route.
Three months ago, when the Union Cabinet decided to release 0.5 MT into the market, it told FCI to ensure the price was maintained at Rs 1,400-1,500 per quintal, when the commodity was selling at Rs 1,250 per quintal in the south and Rs 1,100 per quintal in Delhi. The current decision is a welcome rethink, said Manik Chand, managing director of Panchganga Roller Flour Mills, a Maharashtra-based miller. The price will now be discovered through online auctions.
In the last harvesting season, FCI procured 25 MT wheat out of a total output of 78 MT.