NEW DELHI: Stung by criticism on the wheat front, the Centre is formulating a policy for buying its shortfall in foodgrains for the Public Distribution System (PDS) at market rates. The commercial intervention would be to buy foodgrains at a procurement price — other than the minimum support price — to fulfil the requirements of the Public Distribution System. The intervention would not be "open ended." It would be for a specific quantum of foodgrains

At a high-level meeting chaired by Union Food and Agriculture Minister Sharad Pawar on Friday, it was agreed to have a long-term policy to first procure foodgrains for the PDS at the minimum support price set by the Agriculture Commission for Costs and Prices. In case the government fails to get its requirement for the PDS at MSP — as this year — then it would buy its specific balance requirement from the market at commercial rates. This would bring the procuring agency in direct competition with private players. The higher subsidy involved would have to be borne by the Centre.

However, in a year that agriculture production falls short, the government would have the option of going in for imports. Imports, however, should be the last resort, it was suggested at the meeting.

This year the government has failed to procure its total requirement of wheat for the PDS and has gone in for wheat imports to the tune of 35 lakh tonnes.

While the government agencies procured about 92 lakh tonnes, the private trade and multi-national agencies have cornered about 60 lakh tonnes amid criticism that the government could have bought from the open market for the PDS than go in for imports.

At the meeting, the Food Corporation of India maintained that while it would buy grains at the support price, some other agencies such as the Central Warehousing Corporation or the National Agricultural Cooperative Marketing Federation of India (NAFED) could procure at the market rates so that it would not be in competition with its own agencies for the PDS.

Food Ministry officials were against distortion of the minimum support price by giving bonus, as was done this year. The support price is set after taking into account the input costs and a "reasonable" rate of return to farmers. The minimum support price works as a benchmark for foodgrain prices in the open market and keep prices in check.

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