Context: The Union government plans to release 40,000 tonnes of tur dal from its buffer stock into the retail market in small lots using retail intervention mechanism.
- It has also decided to release 40,000 metric tonnes of tur from the buffer stock in Open Market Sale [OMS] so that the releases may reach the retail market at a faster pace and help in cooling off rising prices.
Reasons behind central sale
- Price rise: At an all-India level, the average retail prices of urad have shot up almost 40% in comparison to last year, while the average retail prices of tur dal have increased almost 24%.
Retail intervention mechanism
- Introduced by the Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution.
- It sells the buffer stock of the National Agricultural Cooperative Marketing Federation of India (NAFED) to moderate retail prices by supplying pulses to the States and the Union Territories.
- NAFED procures pulses from farmers at MSP rates.
- The States are supplied pulses for supply through the ration shops of the Public Distribution System, or through milk and vegetable outlets run by the government or cooperatives.
- For such retail intervention, offer prices are fixed on the basis of MSP itself, or the Dynamic Reserve Price, whichever is lower.
- This move will also help clear NAFED’s existing stock to make way for procurement from this season’s harvest, due to arrive in markets soon.
Open Market Sale Scheme (OMSS)
- Food Corporation of India (FCI) on the instructions from the Government, sells wheat, rice and pulses in the open market from time to time to enhance the supply of wheat and rice especially during the lean season.
- It is 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).
- The FCI conducts a weekly e-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 & OWS.
- National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) is an apex organization of marketing cooperatives for agricultural produce in India, under the Ministry of Agriculture, Government of India.
- It is registered under Multi State Co-operative Societies Act.
- With its headquarters in New Delhi, NAFED has four regional offices at Delhi, Mumbai, Chennai and Kolkata.
- NAFED is the nodal agency to implement price stabilization measures under "Operation Greens" which aims to double the farmers' income by 2022.
- In 2008, it established National Spot Exchange, a Commodities exchange as a joint venture of Financial Technologies (India) Ltd. (FTIL).
Image source: ToI
Food Corporation of India:
- It is an organization created and run by the Government of India.
- It is a statutory body set up by the Food Corporation Act 1964 under the Ministry of Consumer Affairs, Food and Public Distribution.
- It was set up in 1965 with its Initial headquarters at Chennai. Later this was moved to New Delhi.
- It also has regional centers in the capitals of the states. Important regions of the state also serve as district centers.
- Major objectives:
- Effective price support operations for safeguarding the interests of the poor farmers
- Distribution of foodgrains throughout the country for Public Distribution System (PDS)
- Maintaining a satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security
- Regulate market price to provide foodgrains to consumers at a reliable price