Open Market Sale Scheme: E-auction of rice

Context: The Food Corporation of India (FCI) will off load 30 LMT wheat from the Central pool stock to the market through various routes under the Open Market Sale Scheme (Domestic).

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.

Open Market Scheme:

It refers to selling of foodgrains by Government / Government agencies at predetermined prices in the open market from time to time.
It aims 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.
In addition to maintaining buffer stocks and making a provision for meeting the requirement of the Targeted Public Distribution Scheme and Other Welfare Schemes (OWS), Food Corporation of India (FCI) on the instructions from the Government, sells wheat and rice in the open market from time to time.
For transparency in operations, the FCI has switched over to e- auction for sale under Open Market Sale Scheme (Domestic).
The FCI conducts a weekly auction to conduct this scheme in the open market using the platform of commodity exchange NCDEX (National Commodity and Derivatives Exchange Limited).
The State Governments/ Union Territory Administrations are also allowed to participate in the e-auction, if they require wheat and rice outside TPDS and OWS.

Types of OMSS Schemes:

The present form of OMSS consists of three schemes:

Sale of wheat to bulk consumers/private traders through e-auction.
Sale of wheat to bulk consumers/private traders through e-auction by dedicated movement.
Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.

Food Corporation of India (FCI):

FCI is a statutory body established in 1965 under the Food Corporation Act, 1964.
It was created in response to a major shortage of grains, particularly wheat, in the country.
FCI operates under the ownership of the Ministry of Consumer Affairs, Food and Public Distribution, Government of India.
The headquarters of FCI is located in New Delhi.

Objectives of FCI:

Provide effective price support to farmers.
Procure and supply grains to the Public Distribution System (PDS) for distributing subsidized staples to economically vulnerable sections of society.
Maintain a strategic reserve to stabilize markets for basic food grains.

Concerns and Production Challenges

Adverse weather conditions: Unseasonal rains, hailstorms, and higher temperatures have posed challenges to wheat production.
Lower production and higher prices: The adverse weather conditions may lead to reduced wheat production and subsequent price increases.
Rice price fluctuations: Rice prices have already increased by 10% at the mandi level in the last year.
Dependence on monsoon rains: Monsoon rains are crucial for rice production, as 80% of the country’s total rice production occurs during the kharif season.
Potential impact on food security: Lower production and price fluctuations can affect food security, particularly for vulnerable sections of society.
Procurement challenges: Slow wheat procurement and increased prices create difficulties in achieving procurement targets and maintaining stock levels.
Potential impact on overall agricultural output: Production challenges in wheat may have a ripple effect on the overall agricultural sector and farm incomes.
Need for stabilizing measures: Measures to stabilize supply, improve agricultural practices, and manage weather-related risks are crucial to address these concerns.

Reason for FCI discontinuing the sale of grains under OMSS to states

The Centre decided to reduce the quantity that a bidder can purchase under the Open Market Sale Scheme (OMSS).
On June 13, the Centre stopped the sale of rice and wheat from the Central pool under the OMSS to state governments.
Private bidders were also disallowed from selling their OMSS supplies to state governments.
The Centre’s rationale for discontinuing OMSS grains to states is to control inflationary trends and maintain adequate stock levels in the Central pool.
The Centre is already fulfilling its obligations to distribute grains to 80 crore marginalized beneficiaries under the National Food Security Act (NFSA) and ensuring the needs of 60 crore common consumers affected by retail prices.
State governments will now provide foodgrains to the same beneficiaries through the Pradhan Mantri Garib Kalyan Ann Yojana or use them for state schemes with identified beneficiaries.

FAQs Related with E-auction of rice :

Ques 1. What is e-auction of rice?

Answer. E-auction of rice is a process in which the sale of rice is conducted electronically through an online platform. It involves the bidding and selling of rice by various buyers and sellers, facilitated by an electronic auction system.

Ques 2. How does e-auction of rice work?

Answer. In an e-auction of rice, interested buyers participate in an online bidding process to acquire rice. The auction platform allows registered buyers to place their bids for specific quantities and quality of rice. The seller, typically a government agency or rice mill, evaluates the bids and awards the rice to the highest bidder.

Ques 3. What are the advantages of e-auction of rice?

Answer. E-auction of rice offers several advantages. Firstly, it ensures a transparent and fair process, as all bids and transactions are recorded electronically. It also provides a wider reach, allowing buyers from different locations to participate. Additionally, e-auctions streamline the process, making it more efficient and reducing administrative burdens associated with traditional physical auctions.

Open Market Sale Scheme: E-auction of rice,Open Market Sale Scheme: E-auction of rice

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