Nafed gets Rs 900 cr for mustard purchase

National Agricultural Cooperative Marketing Federation of India (Nafed) has received Rs 900 crore from the Union government as the first tranche for mustard procurement. "We have paid for the seed procured till April and sought more money for procurement, which will happen in the rest of the season," said Alok Ranjan, managing director, Nafed.

Nafed began procurement early this season, from March 1 and has procured 13.5 lakh tonne till date. It bought 9.3 lakh tonne from Rajasthan, 1.7 lakh tonne from Madhya Pradesh, 2.06 lakh tonne from Haryana and remaining from other states like Uttar Pradesh, Gujarat and Punjab. While Ranjan refused to elaborate on money required for procurement, the federation's estimates that around Rs 3,600 crore would be required for 20 lakh tonne of seeds.

Sources suggest this season's procurement is expected to touch 25 lakh tonne compared with 20.09 lakh tonne procured last year and the at a cost of Rs 4,500 crore compared with Rs 4,000 crore last year.

The rise is following a higher year-on-year price at Rs 1,715 per 100 kg offered by Nafed when the market price is hovering about Rs 1,500 per 100 kg. Further, out of last year's procurement, about 15.6 lakh tonne is still with Nafed and thus, after June, the federation is likely to be holding onto 40 lakh tonne of seed.

Nafed has been unable to sell the seed in the local market profitably as the prevailing prices "" Rs 200-230 per 100 kg "" is lower than Nafed's cost price. It is processing 35,000 tonne seed per month in 34 mills in Rajasthan, via contract to produce mustard oil which is being sold by Nafed.

Ranjan expressed concern over storage of seed the federation is procuring. "As Rajasthan already has huge stocks and rake availability, to move out seed is low - just about 2 or 3 rakes (carrying 2,000 tonne each) a day, the state will soon find it difficult to store seed. As per estimates, Rajasthan can store about 2 lakh tonne more of seed," he said.

With the disposal of seed at prevailing market price, huge carryover cost of Rs 15 per 100 kg per month, and loss incurred in mustard processing, Nafed saw a loss of Rs 1,360 crore for last year's stock, another official added.

Since mid-February, the federation had stopped daily/weekly market sale of mustard in Rajasthan, the largest producer of the commodity, in a bid to prevent any recycling of grain when the federation began procurement in March. The procurement is made under price support scheme of the Union government. Government had initiated procurement of mustard in a bid to support prices following a bumper crop.