FCI Granaries Are Overflowing – Free PDF Download

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Procurement of wheat and rice in the central pool has been increasing over the years.
This has lead to accumulation of surplus stock of wheat and rice with FCI.
As a result, stocks of food grain in the central pool continue to remain much in excess of stocking norms.

Why does the FCI have so much stock?

The godowns of the Food Corporation of India (FCI) and affiliated State agencies are now packed to capacity.
Years of ‘open-ended’ procurement of rice and wheat from farmers in the key growing States of Punjab, Haryana, Madhya Pradesh, Chhattisgarh, Odisha, Andhra Pradesh and Telangana has ensured that the FCI has huge grain stocks which far exceed buffer-stock norms.
A significant gap between the quantum of procurement of grains and the volume of allocation to States under the National Food Security Act (NFSA).
This has resulted in rising food subsidy expenses, as buffer carrying costs have been rising steadily.

At present, the economic cost of wheat is ₹2505.67 per quintal rice is ₹3601.91 per quintal
The FCI supplies rice and wheat to States under the NFSA at ₹3 and ₹2 per kg respectively.

With Food Corporation of India granaries overflowing, the government is looking to liquidate its grain stocks to prevent damage and minimise the carrying cost in the country beyond the requirement.
The government has been considering several options to liquidate excess stocks held with FCI.

Currently, around 80 crore beneficiaries under the NFSA get 5 kg of grains (rice or wheat) each per month . the distribution of additional food grains would be temporary, till excess stocks could be liquidated.

Open Market Sales Scheme (OMSS) – Results have not been encouraging so far. During 2019-20, FCI offered 22.92 lakh tonnes of wheat but the actual quantity sold till the third tender of September was 5.13 lakh tonnes only.

Similarly, FCI offered a quantity of 8.77 lakh tons of rice for sale through e-auctions but barely 4.12 lakh tonnes sold till the third tender in September.

The market prices of these two commodities are much lower than the economic cost of FCI.
For instance, the economic cost of wheat and rice is budgeted at Rs 2505.67 and Rs 3601.91 per quintal respectively.
Whereas, the market rate of wheat and rice are around Rs 2,100 and Rs 3000 per quintal respectively.

There are provisions in the WTO agreement on agriculture which impose certain restrictions on export from public* stock holding.
*FCI = Public(govt) stock

The Department of Food and Public Distribution has requested the Ministry of External Affairs to explore the possibility of export of wheat and rice from the surplus stock available with FCI, through G2G (government-togovernment) basis in the form of humanitarian aid to deserving countries.

In the past, India has donated food grain to some countries.
In 2011-12, 2013-14 and 2017-18, India donated more than 3.5 lakh metric tonne quantity of wheat to Afghanistan.
In 2012-13, a quantity of 2,447 metric tonne of rice was given to Yemen as humanitarian aid.
Similarly, a small quantity of rice was also donated to each one of five countries — Myanmar, Sri Lanka, Zimbabwe, Lesotho and Namibia — between 2014-15 and 2017-18.
But the same has not happened in the last two years.
FCI reported rotted 46,658 tonnes of food grains in its 1,889 warehouses in 2015
Thousands die of starvation while surplus food stocks rot in depots.
That is the irony that is India.