Centre reduces FCI rice rate to Rs 2,250 for states and ethanol producers, lower than Paddy MSP

The central government has reduced the reserve price of FCI rice for states and ethanol producers by ₹550 to ₹2,250 per quintal to boost sales and support food security measures. This rate is lower than the minimum support price (MSP) of ₹2,300 per quintal for common-grade paddy, as fixed by the government for 2024-25. This decision is being seen as a major relief for distilleries producing ethanol from grains and is expected to boost ethanol production in the country. The revised OMSS policy will remain in effect until June 30, 2025.

According to a statement issued by the Ministry of Food, under the Open Market Sale Scheme-Domestic (OMSS-D), the reserve price of rice has been fixed at ₹2,250 per quintal (Pan-India) for sale to state governments, state government corporations, and community kitchens, without the requirement of participating in e-auctions. The reserve price of rice for sale to ethanol distilleries for ethanol production has also been fixed at ₹2,250 per quintal (Pan-India).

State governments and their corporations can purchase up to 12 lakh tonnes of rice, while ethanol distilleries are allowed to purchase up to 24 lakh tonnes at the reduced rate. Previously, the reserve price of rice for ethanol producers under OMSS was ₹2,800 per quintal. "The OMSS policy aims to enhance food security and ensure efficient distribution of rice to various stakeholders," the ministry said in a statement.

FCI rice will be used in the third round of tenders for the supply of approximately 110 crore liters of ethanol during the ethanol supply year 2024-25, prioritizing older rice stock where feasible. Private traders and cooperatives will continue to procure FCI rice at ₹2,800 per quintal.

Central cooperative institutions such as NAFED, NCCF, and Kendriya Bhandar will pay ₹2,400 per quintal for FCI rice to be sold under the 'Bharat' brand. Private mill owners are not permitted to sell 'Bharat' brand rice; however, hostels, religious institutions, hospitals, and charitable organizations have been granted permission.

The central government had banned rice sales to ethanol distilleries in 2023, lifting the restriction in August 2024. At that time, it allowed the purchase of 23 lakh tonnes of rice from the central pool, but high prices deterred ethanol manufacturers from buying rice under OMSS. In response to the high rice stock in the central pool and low sales under OMSS, the government has now revised the policy.

Government aims to achieve 20% ethanol blending in petrol by 2025-26. In December 2024, ethanol blending reached 18.2%, the highest level ever recorded. According to the ministry, the objective of the OMSS policy is to enhance food security, assist states in fulfilling their commitments, and promote ethanol production.