Centre discontinues sale of rice, wheat under OMSS Scheme

Tags: Economy/Finance Government Schemes National News

The central government has discontinued the sale of rice and wheat from the central pool under the Open Market Sale Scheme (OMSS) to state governments.

An overview of the news

• This decision will affect some states, including Karnataka, that provide free grains to the poor through their own schemes.

• The Food Corporation of India (FCI) has issued an order stating that the sale of wheat and rice under the OMSS for state governments is discontinued.

• However, the sale of rice under the OMSS will continue for northeastern states, hilly states, and states facing law and order situations or natural calamities at the existing rate of Rs 3,400 per quintal.

• FCI may sell rice under the OMSS to private parties from the central pool stock to moderate market prices.

• The central government had previously allowed states to buy rice and wheat from the FCI for their own schemes without participating in e-auctions as part of the OMSS policy for 2023.

Rice prices

• Rice prices have been increasing due to the slow progress of the monsoon and have risen by up to 10% in the last year at the mandi level.

• The monsoon rains are crucial for rice production as about 80% of the country's total rice production is grown during the kharif season.

Open Market Sale Scheme (OMSS)

• Nodal Agency- Food Corporation of India (FCI)

• Purpose- To sell foodgrains, especially wheat and rice, at predetermined prices in the open market.

• Mode of Selling- Weekly auctions by FCI on the platform of the National Commodity and Derivatives Exchange Limited.

• Quantity allowed in a bidding - A bidder can purchase in a single bid range from 10-100 tonne.

• OMSS comprises 2 schemes

• -Sale of wheat to bulk consumers/private traders through e-auction.

• -Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-auction.

About Open Market Sale Scheme (OMSS)

• It is a government initiative launched with the aim of reducing the excess stock of food grains.

• Nodal Agency- Food Corporation of India (FCI)

• Its objective is to sell food grains, especially wheat and rice, in the open market at pre-determined prices.

• The sales are carried out through weekly auctions by FCI on the platform of National Commodity and Derivatives Exchange Limited.

• Under this a bidder can buy in a single bid range of 10-100 tonnes.

• Schemes for sale of wheat to bulk consumers/private traders through e-auction and sale of grade 'A' raw rice to bulk consumers/private traders through e-auction are included under OMSS.

About Food Corporation of India (FCI)

• It is a prominent Public Sector Undertaking (PSU) under the Ministry of Consumer Affairs, Food and Public Distribution in India.

• It was established in 1965 to ensure food security and support the nation's public distribution system.

• FCI's primary mandate is to procure, store, and distribute food grains across the country. 

• It aims to maintain an adequate buffer stock of essential commodities and provide timely and affordable food grains to the vulnerable sections of society.

• FCI undertakes the procurement of food grains from farmers at Minimum Support Prices (MSPs) declared by the government. 

• It procures crops such as wheat, rice, and coarse grains directly from farmers through designated procurement centers.