No takers for FCI rice in E-auction to check inflation

Recently, the Centre discontinued sale of rice to states including Karnataka under the Open Market Sale Scheme – Domestic (OMSS-D).
It had asked the Food Corporation of India (FCI) to e-auction grains in the market to control rising prices. However, there were not many buyers for this auction as FCI received bids for only 170 metric tonnes despite 3.86 lakh metric tonnes of rice on offer.

About the Open Market Scheme:

It refers to the selling of food grains by the Government at predetermined prices in the open market from time to time.
Objective: to enhance the supply of grains, especially during the lean season and thereby to moderate the general open market prices, especially in the deficit regions.
Ministry: Ministry of Consumer Affairs, Food and Public Distribution.
Mechanism:-
- Under the OMSS, the FCI from time to time sells surplus food grains from the central pool, especially wheat and rice in the open market to traders, bulk consumers, retail chains, etc., at predetermined prices.
- The FCI does this through e-auctions where open market bidders can buy specified quantities.
- The FCI conducts this weekly auction using NCDEX (National Commodity and Derivatives Exchange Limited).
- NCDEX: a commodity exchange platform in India that provides a platform for trading in various agricultural and other commodities.
- The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction if they require wheat and rice outside Targeted Public Distribution System (TPDS ).

Food Corporation of India (FCI)?

It is a statutory body set up in 1965 (under the Food Corporation Act, 1964) under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
It was set up against the backdrop of a major shortage of grains, especially wheat, in the country.
Currently, FCI is mandated with three basic objectives:
- To provide effective price support to farmers;
- To procure and supply grains to PDS for distributing subsidised staples to economically vulnerable sections of society; and
- Keep a strategic reserve to stabilise markets for basic foodgrains.

Functions of FCI:

It has the primary duty to undertake the purchase, store, transport, distribute and sell food grains and other foodstuffs. (UPSC CSE: Procurement Reforms)
To provide farmers with remunerative prices.
To make food grains available at reasonable prices, particularly to vulnerable sections of society.
To maintain buffer stocks as a measure of Food Security.
To intervene in the market for price stabilization.

FAQs about No takers for FCI rice in E-auction to check inflation

Q1: Why is the discontinuation of rice sales to states under the Open Market Sale Scheme (OMSS-D) in the news?

The Centre has discontinued the sale of rice to states, including Karnataka, under the OMSS-D scheme to control rising prices. However, there were not many buyers for the e-auction conducted by the Food Corporation of India (FCI), resulting in bids for only 170 metric tonnes of rice despite 3.86 lakh metric tonnes being on offer.

Q2: What is the objective of the Open Market Sale Scheme (OMSS)?

The objective of the OMSS is to enhance the supply of grains, especially during the lean season, and moderate general open market prices, particularly in deficit regions.

Q3: Which ministry is responsible for the Open Market Sale Scheme?

The Open Market Sale Scheme falls under the purview of the Ministry of Consumer Affairs, Food and Public Distribution.

Q4: How does the e-auction process under the OMSS work?

The Food Corporation of India (FCI) conducts weekly e-auctions using the National Commodity and Derivatives Exchange Limited (NCDEX) platform. Traders, bulk consumers, and retail chains participate in the auction to buy specified quantities of surplus food grains at predetermined prices.

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