Open Market Sales Scheme (OMSS), Objectives and Implementation

Context: The Kerala government criticised the Central government’s decision to prevent state governments and agencies from buying food grains through the Open Market Sale Scheme (OMSS).

About Open Market Sales Scheme

• What?: Food Corporation Of India (FCI) sells surplus wheat and rice in the open market through e-auction.
• Objective:
  • Increase food grain supply during lean seasons.
  • Moderate open market prices, especially in deficit regions.
• How?:
  • Weekly e-auctions on NCDEX (National Commodity and Derivatives Exchange Limited) platform.
  • Open to bulk consumers and private traders.
  • State governments can participate for needs beyond Targeted Public Distribution Scheme (TPDS) and Other Welfare Schemes (OWS).
  • Reserve price set by the government (bids cannot be lower).

We’re now on WhatsApp. Click to Join

Objectives of the Open Market Sale Scheme 

• Increase Food Grain Supply: The primary objective of OMSS is to augment the supply of food grains, especially during lean seasons when the availability might be limited. By making additional stocks available in the market, the scheme aims to meet the demand and prevent shortages.
• Price Moderation: OMSS endeavors to moderate open market prices by flooding the market with government-held stocks. This helps in stabilizing prices, particularly in regions facing deficits or experiencing price fluctuations.
• Minimize Storage Costs: Offloading excess food grain stocks from the central pool through OMSS helps in reducing the carrying costs associated with storage. By selling surplus stocks, the government can free up valuable storage space for upcoming procurement seasons.
• Ensure Quality Preservation: By facilitating the sale of food grains through OMSS, the government ensures that stocks are utilized for human consumption, thus minimizing the risk of deterioration in quality.

We’re now on WhatsApp. Click to Join

Implementation of Open Market Sale Scheme 

• Electronic Auctions: The Food Corporation of India has adopted electronic auctions as the primary method for conducting sales under OMSS. This approach enhances operational transparency and efficiency in the sale process.
• Participation of State Governments: State governments and Union Territory administrations are also allowed to participate in the online auctions if they require wheat and rice beyond the scope of the Targeted Public Distribution System (TPDS).
• Components of OMSS: The current version of OMSS comprises three main components:
  • E-auction sales of wheat to large customers or private merchants.
  • Dedicated movement sale of wheat through online auctions to wholesale buyers or private dealers.
  • E-auction sales of Grade “A” raw rice to wholesale customers or individual dealers.

The Role of Food Corporation of India (FCI) 

The Food Corporation of India, established in 1965 under the Food Corporations Act of 1964, plays a pivotal role in the implementation of OMSS. FCI is entrusted with various responsibilities, including procurement, storage, transportation, distribution, and sale of food grains across the country. Key objectives of FCI include ensuring fair compensation to farmers, stabilizing food security, maintaining buffer stockpiles, and supporting price operations to safeguard farmers’ interests.

Conclusion 

In essence, the Open Market Sale Scheme (Domestic) serves as a vital tool for governments to ensure food security, stabilize prices, and efficiently manage food grain stocks. By strategically selling surplus stocks in the open market, governments can address supply-demand imbalances, mitigate price volatility, and safeguard the interests of both producers and consumers in the agricultural sector. Through transparent and effective implementation, schemes like OMSS contribute significantly to the overall welfare of the agricultural economy and the populace at large.

Sharing is caring!