Nafed may resume mustard procurement

The government is likely to ask the National Agricultural Cooperative Marketing Federation of India (Nafed) to procure more mustard in the wake of rising pressure from states such as Rajasthan and Gujarat, a senior agriculture official said.

"Following increasing pressure from chief ministers of Rajasthan, Gujarat and Haryana, high-level reviews have been on for the last two days. The issue was also discussed at the Prime Minister's Office and thus, we may ask the federation to procure more mustard," the official said.

He added that the additional procurement of mustard under the price support system is unlikely to be more than 1.5-2 lakh tonne. Between March 1 and May 7 the federation procured about 19 lakh tonne at the minimum support price of Rs 1,715 a quintal compared with 20.93 lakh tonne last year at a MSP of Rs 1,700.

With the additional purchase, procurement this year is likely to touch 20.5-21 lakh tonne, almost the same as last year, the official said.

At present, the federation is holding onto a carry-over of 15.15 lakh tonne, said Alok Ranjan, Nafed's managing director. Thus, post-procurement there would be stock of over 35 lakh tonne.

The finance ministry had allocated Rs 3,600 crore, the same as last year, for this year's procurement. Nafed had on May 7 stopped procurement following the agriculture ministry orders.

With higher production this year, market players had expected mustard procurement to touch 25 lakh tonne. As per official estimates, the procurement of 25 lakh tonnes seed would have required about Rs 4,500 crore.

Mustard procurement had started on March 1 this year, a month earlier than usual. It was carried out in Rajasthan, Madhya Pradesh, Haryana, Uttar Pradesh, Gujarat and Punjab.

The rise in estimated procurement was also due to better MSP of Rs 1,715 when the market price is hovering at about Rs 1,500 a quintal.

Out of last year's procurement, Nafed is still holding on to 15.15 lakh tonnes seed. It has been unable to sell the seed in local market profitably as the prevailing prices are Rs 200-230 per 100 kg lower than Nafed's cost price.

Ranjan, however, expressed concern over storage facility for the extra seed procurment.

"As Rajasthan already is storing huge stock and availability of rakes to move the 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 the seed," he said.

With the disposal of seed at prevailing market prices, huge carryover cost of Rs 15 a quintal 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.

The procurement is made under price support scheme under the Union government. The government had initiated procurement of mustard in a bid to support prices following a bumper crop.