Exports, schemes for pvt players to tackle storage crisis

SANDIP DAS
Posted: Friday, Jun 15, 2012
Financial Express
New Delhi: With grain stocks held with the Food Corporation of India (FCI) and other state-owned agencies crossing the 82-million-tonne-mark, the government is mulling over extra allocation to states, exports and liberalisation of the Open Market Sale Scheme (OMSS) for private players to deal with the storage crisis.

FCI and state-owned agencies together have a storage capacity of around 61 million tonne (mt).

Official sources told FE that the food ministry has proposed hiking the annual allocation to states under various programmes, such as Targetted Public Distribution System (TPDS), from the current level of 55 mt to 75 mt to ease the storage crunch.

An Empowered Group of Ministers (EGoM) is set to take a call on the issue soon.

“States have been lifting around 80% of the grain allocated. By increasing allocation, we hope to ease the storage crunch to an extent,” said a food ministry official.

The current stocks far exceed the strategic reserve and buffer stock norms of close to 22 mt of grain (rice and wheat).

With farmers still bringing in wheat to mandis, FCI has started hiring private places for keeping the grain temporarily.

At present, close to 1.2 mt of wheat is lying in mandis as FCI has been unable to create storage space.

As reported by FE, the government has initiated the process of exporting close to 3 mt of wheat to Iran from the FCI stocks. “We are looking at export of wheat from our stocks. There are some countries like Uganda, some Gulf nations, Afghanistan and Pakistan that need wheat,” food minister KV Thomas had said earlier.

The government is expected to take a call on liberalising the OMSS for attracting private flour millers to lift grain. “Due to higher prices offered under OMSS compared to the market rate, the scheme has failed to generate interest among private players,” said an official.

According to an estimate, the food subsidy bill crossed R88,000 crore in the last fiscal. If the food ministry's proposal is accepted, the food subsidy bill is expected to crossed R1 lakh crore while the government had budgeted for only R74,551 crore for 2012-13.

In anticipation of a bumper wheat output, estimated at 90.2 mt, the government has already procured more than 36 mt during the current (2012-13) period against the target of 31.8 mt. Last year, FCI lifted 28.33 mt of wheat from farmers.