Govt stops wheat sale in North on fears of recycling

The Financial Express
New Delhi, 18 March 2009

The Centre has stopped selling wheat through Food Corporation of India in the growing belt of Punjab , Haryana and other states on fear of recycling as it prepares to procure the grain in a fortnight. Wheat sale under the open market sale scheme (OMSS) has been extended till March-end only in the non-growing states, a government official said, adding that in the growing belt the scheme expired on February 28. “The Centre did not want a situation where the same wheat taken from FCI at a cheaper rate be sold to it at a higher rate when the procurement begins from April 1,” he said. The government in September last year had decided to sell 9.09 lakh tonne of wheat under OMSS while raising it further to 13.84 lakh tonne in phases. Under the scheme, the states were offered wheat from FCI at the minimum support price of Rs 1,000 a quintal (excluding transport and taxes), fixed for 2008-09 season. The reserve price of wheat for states in the northern region, barring Himachal Pradesh, is between Rs 1,023 and Rs 1,063 a quintal, which is below the MSP of Rs 1,080 a quintal for 2009-10 season. The scheme was initially valid for two months but the government extended it to keep a check on domestic prices. It expired on February 28 in the wheat growing belt. Another reason for extending the scheme was the demand for wheat in southern states -- Tamil Nadu, Andhra Pradesh, Kerala, Karnataka -- which have been allotted nearly four lakh tonne out of 11.55 lakh tonne across the country, the official said. “The lifting of wheat, however, stands at 5.95 lakh tonne in the country,” he added. The official also said that the Centre had not extended the scheme of selling wheat to the states, which expired on February 28, as the states lifted only about 80,000 tonne of wheat while the central government wanted to offload nearly one million tonne. Meanwhile, the Centre is all set to start wheat procurement from April 1 for the 2009-10 season and is expecting another bumper purchase. Last year, it had procured 226 lakh tonne of wheat. The government expects a wheat production of 77.78 million tonne this year.