Market keeping a close eye on government policy of wheat and rice sale
12-Feb-2025 04:53 PM
The market is closely monitoring the government's policies regarding wheat and rice sales, particularly under the Open Market Sale Scheme (OMSS).
In the 2023-24 period, the Food Corporation of India (FCI) set a record by selling approximately 100 lakh tonnes of wheat under the OMSS to control rising prices. However, at that time, rice sales were much lower, almost negligible, compared to wheat.
For the period from December 2024 to March 2025, the government has set a target of 30 lakh tonnes of wheat for sale under the OMSS, with 1.5 lakh tonnes being offered in weekly e-auctions. Millers and processors are purchasing nearly the entire quantity.
In contrast, rice sales have decreased significantly, as there is an adequate supply in the open market. The government is also eager to reduce its large rice stock.
Interestingly, no maximum quota has been set for rice sales under the OMSS, and its prices have been reduced for various purposes.
Rice is also being sold under the brand name "Bharat." The government is keen to reduce its stock of rice, which has accumulated significantly.
The wheat sale began later than expected in the Central Buffer Stock, and by that time, the wholesale prices of wheat had risen sharply.
Initially, the government expected that the ample domestic wheat stock would increase market availability once supply limits were implemented, and that prices would naturally soften.
The Union Agriculture Ministry had projected a record wheat production of about 1133 lakh tonnes for the 2023-24 Rabi season, but industry estimates were lower, around 1020-1040 lakh tonnes. When the expected increase in supply didn't materialize and prices didn't fall, the government began its wheat sale under the OMSS.
Additionally, the government has set the price of rice for ethanol manufacturers at Rs 2250 per quintal, with 24 lakh tonnes allocated for that purpose. States can lift unlimited quantities of rice from the central pool at a fixed price.
The market is now paying attention to these developments, as the government's policies will likely affect the overall supply and pricing of these staples in the coming months.