Nafed to sell mustard on daily basis

The National Agricultural Cooperative Marketing Federation of India (Nafed) has decided to sell small amounts of mustard on a daily basis, "if and when the bids received are right," managing director Alok Ranjan said.

"We will be accepting bids for the weekly tender on a daily basis but as and when if the bids we receive are good, we will sell of the quantity on that day itself," Ranjan said.

Following this policy, Nafed today cleared a tender of 200 tonne mustard with an oil content of 39 per cent at Rs 1,685 per 100 kg, he said. The tender was from Bundi, Rajasthan.

Ranjan said the bids cancelled two days back were for mustard with over 40 per cent oil content which at current market price should have at least received bids at over Rs 1,715 per 100 kg.

"The highest bid we received was at Rs 1,681 per 100 kilograms. As we felt that we could get better price, we had not accepted any of the bids," he added.

Quantity is not a concern for daily tenders while a minimum amount of 200 tonne remains on the eligibility criteria for weekly tenders, Ranjan said.

As the tender price is inclusive of tax, Ranjan said, "We can say that we got a good prices with the tender being from Rajasthan and not Uttar Pradesh." In Uttar Pradesh, the commodity would have attracted additional tax of 6.5 per cent, he added.

As the quantity sold today was small, market players say the decision is likely to help keep prices almost firm, not just mustard seed but the whole edible oil complex.

They, however, added that as similar tenders come forth, prices will begin softening. Nafed maintains its stand that its cost price is as high as Rs 1,870 per 100 kg, including buying at Rs 1,700 and carrying cost being assessed at 10 per cent.

Nafed has procured mustard at an all-time high of 20.9 lakh tonne at the minimum support price of Rs 1,700 per 100 kilograms in 2005-06 . The procurement, which was done in the April-June period, was made under price support scheme under union government.

Nafed has spent around Rs 3,500 crore on mustard procurement in two tranches. The first tranche was of Rs 2,000 crore and the second of Rs 1,500 crore.

Government had initiated procurement of mustard in a bid to support prices following a bumper crop.

As per official estimates, the country's total mustard output in 2004-05 (July-June period ) is around a record 7.64 million tonne, up 23 per cent from a year earlier. Industry estimates, however, peg output at 6.25 million tonnes.

On talk of a bumper mustard crop, mustard prices were down to Rs 1,480-1,500 per 100 kilograms in the open market. At this time, Nafed began procuring at around Rs 200 higher than market prices, thereby, offering farmers a better place to offload their produce.

For over a fortnight, mustard prices""physical and futures""has remained firm and even crossed a high of Rs 1,800 on Wednesday when the federation cancelled the first tender.