The government has refused to reimburse agri-cooperative Nafed any loss it might suffer for offloading 3.10 lakh bales of 'damaged' cotton worth Rs 150 crore in the open market, according to sources.
Nafed, which is a designated agency along with Cotton Corporation of India (CCI) to procure cotton on behalf of the government, procured 36 lakh bales of fibre in 2008-09 season at the minimum support price of Rs 2,800 a quintal for the fair average quality (FAQ).
They are entitled for reimbursement by the government if they incur losses while offloading stocks in the open market.But when Nafed brought out a tender to auction 'discoloured/rain/water and fire affected/off grade' cotton last month, it came to light that 3.10 lakh bales of this 36 lakh bales were damaged.
The auction was cancelled on September 3 following the directive of the Agriculture Ministry, sources said. The co-operative did not assign any reason for cancelling the auction and just said that "auction/display notice of August 26 for disposal of 'damaged/off grade' cotton bales is cancelled."
According to sources, these 3.10 lakh bales of cotton were procured by Maharashtra State Cooperative Cotton Growers Marketing Federation (MSCCGMFL) on behalf of Nafed.
When contacted, MSCCGMFL Managing Director Ujjwal Uke confirmed that there was "some confusion" regarding 3.10 lakh bales of cotton procured by MSCCGMFL on behalf of Nafed. "Our entire purchase of cotton on behalf of Nafed was of FAQ grade as defined by the textile commissioner. We have asked Nafed to get the cotton tested by technical experts," Uke said, noting that FAQ grade cannot be judged on the basis of 'colour'.
He remarked that the MSCCGMFL has been in the business of cotton for past many years while Nafed lacks similar experience. MSCCGMFL has procured 167.93 lakh quintal worth Rs 4,717.24 crore of raw cotton in 2008-09 season through 290 centres in 11 zones of Maharashtra.
According to sources, the Nafed management withdrew an official looking after 'cotton' after he insisted that the agri-cooperative should not take delivery of 'damaged' 3.10 lakh bales of cotton. After cancelling the auction, Nafed is yet to take a decision on the fate of the 3.10 lakh bales of 'damaged' cotton, they added.
