FCI rice sales poor in open mkt scheme, only 42% rice sold Thursday
This story was originally published at 20:34 IST on 24 January 2025
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By Afra Abubacker
NEW DELHI – Though Food Corp. of India has started selling rice twice a week since the start of the month, the offtake at auctions remains poor due to good supplies in the market. FCI offered 102,000 tonnes of rice on Thursday but only 42% or 43,000 tonnes was sold, FCI data showed. Since August, FCI has sold only 1.07 million tonnes out of the 3.12 million tonnes of rice offered.
The stock of rice at FCI godowns as on Jan. 1 was 29.1 million tonnes, the highest for a month in a decade. "There's an ample amount of rice stocks available, maybe four times the stocking norms. And our rabi season crop is also coming...we need to have space to store," IGrain India Director Rahul Chauhan told Informist Tuesday.
To clear its stocks, the government has asked FCI to sell rice to distillers at a subsidised rate of INR 2,250 per 100 kg, INR 50 below the government's paddy procurement cost. The minimum support price of paddy in 2024-25 was INR 2,300 per 100 kg and INR 2,183 last year. The government bears transportation, storage and milling costs over and above the paddy procurement cost.
Oil companies buy ethanol from distilleries to blend it with petrol to promote green mobility. The government has asked FCI to sell 2.4 million tonnes of rice by the end of March for ethanol production. FCI will start selling rice to distillers once oil companies allocate ethanol supply quantities.
Though the government has asked oil companies to tender 1.1 billion litres of ethanol made from rice, oil companies are yet to float the tender. The market expects the tender to be out soon.
Unlike before, FCI will not auction its rice for ethanol production but sell it directly to distilleries at INR 2,250 per 100 kg, an FCI official said. "Rice will be directly sold to distilleries, not under OMSS (open market sales scheme) auctions," the official added.
Ethanol and alcohol makers have cheered the availability of cheap FCI rice. Shares of companies like Globus Spirits Ltd. rose more than 15% after the government reduced rice prices for distillers on Jan. 17. On Thursday, the all-India average wholesale price of rice was INR 3,852.8 per 100 kg, down 0.3% on year, according to the Department of Consumer Affairs data.
The market expects robust offtake of FCI rice by distillers amid firm demand for grain-based feedstocks to make ethanol. So far, state oil marketing companies have floated two ethanol supply tenders and grain-based distilleries have bagged most orders. Of the orders for 9.30 billion litres of ethanol, grain-based units will supply nearly 64%, and sugar-based distillers 36.3%. End
Edited by Nishant Maher
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