Ministry to procure mustard at MSP

The agriculture ministry has proposed a Cabinet note on the procurement of mustard under the minimum support price (MSP) scheme next season, starting mid-March, disposal of the huge carryover stock and revision of import duty on palm oil to curb rising edible oil imports.

As per the latest estimates, mustard procurement, which is likely to cross 25-26 lakh tonne this marketing year 2006-07, is expected to cost Rs 4,500 crore compared with 20.91 lakh tonne for Rs 4,000 crore in 2005-06, according to a senior government official.

Further, the proposed note discusses the issue of disposal of current stock that National Agricultural Cooperative Marketing Federation of India (Nafed) is holding "" about 18 lakh tonne.

With the disposal of seed at the prevailing market price, Nafed is likely to incur a loss of Rs 1,360 crore for the current stock owing to a huge carryover cost of Rs 15 per 100 kg a month, the official added.

Nafed was appointed the nodal agency last year to undertake the procurement and will continue to do so this year as well.

Nafed has already started booking warehouses wherever possible in Rajasthan "" the largest producer of the commodity, purchasing gunny bags and shifting mustard from warehouses in Rajasthan to other states, said its managing director Alok Ranjan.

The federation has also stopped daily/weekly market sale of mustard in Rajasthan from today onwards in a bid to prevent any recycling of grain when the federation begins procurement next month.

"Market sale will continue in other centres till February 15 and after that it will continue only at Kolkata, which is a high-consumption but non-producing centre," said Ranjan.

The proposed Cabinet note has also asked for an increase in import duty on palm oil to curb cheaper edible oil imports and help improve domestic market for mustard. The current duty on palm oil is between 80 per cent and 90 per cent, and the bound rate, as per the World Trade Organisation agreement, 300 per cent.

A rise in duty, in case of soyoil, is possible only if the Union government differentiates between genetically modified (GM) and non-GM soyoil, another Nafed official said.

The federation has approached the government on the matter. At present, soyoil attracts an import duty of 45 per cent, matching the WTO bound rate.

Also, Nafed's initiative of processing mustard oil and selling it in loose form, tin or consumer packaging is unlikely to be a profitable venture, as the prevailing prices are much lower than the cost price for the federation.

Nafed has initiated contract processing of 4 lakh tonne seed at about 34 mills in Rajasthan, which are processing about 1,000 tonne seed per day.

Nafed has procured mustard at the MSP of Rs 1,700 per 100 kg in the financial year 2005-06. The procurement was made under the price support scheme under the Union government, had initiated procurement of mustard in so as to support prices following a bumper crop.