The Tepid Response to Open Market Sale of Rice Persists in 2023
In its third weekly electronic auction, FCI sells 0.17 MT of wheat.
In its third weekly e-auction held under the open market sale system (OMSS), the Food Corporation of India received bids on Wednesday for 0.17 million tonnes (MT) of wheat to be sold to bulk purchasers, including flour millers and food firms, as opposed to 0.41 MT offered.
However, the second e-auction for selling 0.36 MT of rice only drew lukewarm interest from bidders, who only offered to buy 290 tonnes of grain.
According to an FCI statement, “the wheat saw an increase of 38% increase in sale while there was an increase of 70% sale as compared to last e-auction.”
The company has sold 0.38 MT of wheat in the open market in the first three weekly wheat e-auctions conducted thus far.
According to sources who spoke to FE, the average bid for fair and middle-grade wheat was Rs 2,156.67 per quintal, slightly more than the reserve price of Rs 2150 per quintal. The current season’s Minimum Support Price (MSP) for wheat is Rs 2125 per quintal.
This week’s average bid price for rice under the OMSS was Rs. 3110.07/quintal, higher than the reserve price of Rs. 3110.07.
According to the OMSS, the government has agreed to sell 1.5 MT of wheat from the central pool to flour millers, independent merchants, large purchasers, and producers of wheat-based goods until March 2024 to monitor prices.
Officials claimed that despite FCI selling rice on the open market for years, there had been little demand from traders and huge consumers due to the cereal’s abundant and diverse production nationwide.
According to a representative of the food ministry, the FCI would keep selling foodgrains from its surplus supplies until the inflationary trend in cereal prices is stopped. The official claimed that the present grain supplies are sufficient for open market sales and are over the buffer.
Following the previous policy, FCI sold surplus wheat to large purchasers from January through March.
Through weekly auctions, FCI sold 3.37 MT of wheat under OMSS from February 1 to March 15, 2023. The open market sales of the FCI were 2.5 MT in 2020–21 and 7 MT in 2021–22.
In contrast to the 18.4 MT per year required by the government for the National Food Security Act (NFSA) implementation, FCI’s wheat stock as of July 11 was 29.71 MT. What’s July 1 buffer is 27.58 MT.
FCI presently possesses 25.66 MT of rice, which excludes the 14.93 MT of rice that millers owe as of this month’s first day. The rice supply is below the July 1 buffer of 13.54 MT.
For NFSA allotment, the firm requires 36 MT of rice yearly. On October 1, the next paddy procurement season (20223-24) will start.
According to officials, the administration is debating several possibilities, including lowering the 40% import levy on wheat now in place.
To rein in price increases, the government last month set stock-holding restrictions on wheat for the first time since 2008 for dealers, wholesalers, and retailers through March 31, 2024.
As 2023 unfolds, the global market has witnessed a lukewarm response to the open sale of rice, which has perplexed and annoyed stakeholders. This tepid response has become an increasingly glaring issue, potentially indicating broader systematic problems with current agricultural and market trends.
The open market sale of rice is integral to the global agricultural trade. It provides a critical economic foundation for many nations, particularly Asia and Africa, where rice is a staple food for billions of people. It offers a regular income to farmers and ensures that consumers have steady access to essential food items.
However, since 2023, the market has witnessed a decrease in enthusiasm and a general apathy towards buying and selling rice. This trend has caught the attention of traders, government officials, economists, and agriculture specialists seeking to understand the root causes.
Several factors contribute to this lukewarm response to the open market sale of rice.
Over the past year, the prices of rice have seen significant fluctuations. These swings have been attributed to environmental issues such as unpredictable weather patterns affecting production, geopolitics, and market speculations. As a result, many traders are reluctant to engage fully in the market due to the financial risks involved.
Globally, there’s a notable shift in dietary habits. The rising awareness about health, nutrition and the push towards diverse diets has caused a reduction in the overall demand for rice. A clear trend can be observed in urban areas, where consumers choose different grains and carbohydrates instead of rice.
The COVID-19 pandemic has had a lasting impact on all industries, including agriculture. Labour shortages, supply chain disruptions, and financial strain faced by consumers have played a significant role in reducing demand and causing hesitations in the open market sale of rice.
The tepid response to open market sales profoundly affects farmers and the more significant agricultural sector. For rice producers, the lower demand and unpredictability of prices mean a substantial reduction in income, impacting their livelihoods. These challenges could further exacerbate problems in regions grappling with poverty and food security issues.
Given the prevailing circumstances, governments, policymakers, and stakeholders must intervene and implement strategies that could revitalize the open market sale of rice.
Creating more stable and predictable markets could be a step in the right direction. This could include better storage facilities, improving information transparency about prices, and making crop insurance more accessible.
National and international agencies can launch initiatives to promote the nutritional benefits of rice, especially in urban areas where the trend towards other food items is prominent.
Government programs could support farmers directly, providing subsidies or financial assistance to help them weather this storm. This could also include educational programs to help farmers diversify their crops and incomes.
The continuing tepid response to the open market sale of rice is a worrying trend with far-reaching implications. It calls for thoughtful and swift interventions to safeguard the interests of producers while ensuring global food security. It’s a complex challenge, but with concerted effort, there’s the potential for revitalization and resilience in the face of change.a
