In an effort to curb inflationary trends and regulate retail prices of wheat and rice, the Food Corporation of India (FCI) has been directed by the government to conduct e-auctions for these essential commodities.
This move comes as part of a market intervention strategy aimed at stabilizing prices and ensuring fair distribution. Chairman and Managing Director of FCI, Ashok K. K. Meena, made this announcement during a press conference held yesterday in New Delhi.
Under the new directives, the base price for wheat remains unchanged at Rs. 2150 per quintal for FAQ (Fair Average Quality) and Rs. 2125 per quintal for URS (Under Rice Scheme) wheat. To tackle hoarding issues, the government has made it mandatory for participants to declare their stocks in the Wheat Stock Monitoring System portal. Additionally, to identify genuine processors and traders, a valid FSSAI (Food Safety and Standards Authority of India) license is now required for participation.
To accommodate small-scale processors and traders, the minimum bidding quantity has been set at 10 metric tons (MTs), while the maximum bid quantity has been capped at 100 MTs. Furthermore, in an effort to support small and marginal traders and processors of wheat, the earnest money deposit (EMD) required for participation in the e-auctions has been reduced by 50% compared to previous levels.
In order to prioritize local buyers, the bidding process has been restricted to those with valid GST registration in the respective states. This measure ensures that the stocks offered in a particular state reach a wider local audience and promote localized consumption.
The first e-auction for wheat is currently underway, with a total of 4 lakh metric tons (LMTs) of wheat available from 457 depots across the country. After April 1, 2023, 271 new buyers have been empanelled, bringing the total number of active empanelled bidders to 2,093. Looking ahead, the e-auction for rice under the Open Market Sale Scheme (Domestic) is set to commence on July 5, 2023, with a base price of Rs. 3100 per quintal.
The FCI's proactive market interventions have already yielded significant results. Through six weekly e-auctions conducted until March 15, 2023, a substantial quantity of 33.7 LMTs of wheat was offloaded, resulting in a notable 19% reduction in wheat prices within a span of 45 days. However, due to the ongoing Rabi Procurement period for wheat, the market intervention was temporarily suspended.
