Nafed not to buy AP chilli till dues are paid

The National Agricultural Co-operative and Marketing Federation (Nafed) will not procure chillies under the market intervention scheme in Andhra Pradesh until it is fully compensated for earlier losses, managing director Alok Ranjan said on Tuesday.

The agency has been directed by the agriculture ministry not to procure the commodity from Andhra Pradesh till the government pays up for the losses incurred, Ranjan said.

In 2004-05 (April-March), Nafed lost Rs 50 lakh under the market intervention scheme, as the government merely compensates half of the possible losses in the procurement process.

"The market intervention scheme does not fully cover the losses. Last year, we had to bear losses in the procurement of chillies," he said.

"The agriculture ministry has approached the finance ministry to make changes under the market intervention scheme and to fully compensate us for the difference between the market price and the minimum support price set by the government," he said.

"We hope to get the clearance for changes in the intervention scheme by next week," he added. For the second consecutive year, Andhra Pradesh is seeing chilli prices crash due to a bumper crop.

The current physical market price of the commodity is around Rs 1,900-1,950 per 100 kgs against last year's Rs 2,200-2,300.

In the farmers' interest, the government has set minimum support prices much higher than the domestic and global prices. The support price for chilli has been set at Rs 2,700 per 100 kg for the premier variety and Rs 2,500 per 100 kg for the common variety.

The procurement agency further spends an estimated Rs 358 per 100 kg for the premium variety and Rs 340.90 for common variety on overhead expenditure, an agriculture ministry official said.

On Monday, the Andhra Pradesh Co-operative State Marketing Federation started procuring 30,000 tonnes of Guntur sannam general variety of red chilli from farmers at Rs 2,300 per 100 kg, which will go on till May-end.

Last year, the state procurement agency and central agency Nafed together procured chilli at Rs 2,700 per 100 kg. Andhra Pradesh produces almost half of the country's total output of chillies.

According to latest estimates, the state's chilli output in 2005-06 (April-March) is pegged at 600,000 tonnes compared with the country's estimated output of 1.18 million tonnes""the same as last year.

India is the world's largest producer, consumer, and exporter of chillies. About 90 per cent of India's chilli output is consumed in the country.