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Food Corporation of India Offers $3.32 BN Loans

09 May 2014

INDIA - In order to meet its working capital requirement, the government procurement agency, Food Corporation of India (FCI) has invited tenders for securing unsecured loans worth $3.32 billion, writes Jagdish Kumar.

The tender which was floated on 24 April closed on 30 April.

“We have been invited the tender to meet our working capital requirement, which includes procurement of wheat, building storage capacity, logistics costs, others,” FCI official told Jagdish Kumar.

FCI has fixed the minimum quote for an amount of $42 million and tranche size has been kept at $3.32 billion, the tender document adds.

“Rate of interest for the loan will be between eight per cent to 8.5 per cent calculated on per annum basis, however, the final call has yet to be taken” FCI official revealed.

So far in the Rabi season (February-April), we have already procured 20 million tonnes and we have a target of procuring 11 million tonnes more for this season, the official added.

The procured wheat is for National Food Security programme, public distribution scheme (PDS), other state and central government programme.

The wheat will be procured from Punjab, Madhya Pradesh, Haryana and some from Rajasthan, the official said.

Speaking on the current storage capacity in the country, the official said that we have an annual storage capacity of 39 million tonnes of wheat, which includes 25 million tonnes of covered storage and the remaining is open storage.

He said that we have been increasing the covered storage capacity, as two million tonnes of silo storage capacity will be added soon.

In 2013-14, the government provided $12.45 billion as subsidy to FCI, while subsidy incurred during the year was at $17.34 billion.

The total subsidy arrears, including arrears carried over from the previous years amounted to about $8.30 billion.

The primary task of FCI is of purchasing and ensuring effective prices to farmers on behalf of the government and to ensure required supply of food grains at cheaper rates throughout the country.

FCI's arrears have increased in the last few years due to increase in the minimum support prices (MSP) for food grains as well as high procurement, storage and distribution costs.

The economic cost which is total of MSP, procurement storage and distribution costs for wheat has increased to $32.08 per quintal in 2013-14 fiscal year, as against $24.81 per quintal in 2010-11 fiscal year.

TheCropSite News Desk

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