The Hindu Business Line : Nafed stops sale of mustard as precaution

In a dilemma
The federation may incur Rs 1,000-cr loss.
Resumption of sales likely from June.
Good crop this year also is a cause for worry

Recently in New Delhi

The National Agricultural Cooperative Marketing Federation (Nafed) has stopped sales of its mustard stocks in all markets, except at the Kolkata terminal. On the other hand, it has also begun to process the stocks into oils, according to the federation's top official.

"We have stopped sales to ensure that it doesn't get recycled when we begin procurement of the current rabi mustard. We expect to sell 30,000-40,000 tonnes till June, while we also plan to crush 35,000-40,000 every month," said Mr Alok Ranjan, Nafed's Managing Director.

Nafed had procured a record 20.93 lakh tonnes (lt) of mustard as part of the Centre's price support scheme. The Union Government had asked Nafed to procure mustard as its price fell below the minimum support price (MSP) of Rs 1,715 a tonne last year.

Of the total quantity procured, Nafed still has a stock of 16.40 lt, according to Mr Ranjan.

Nafed will again procure mustard this year to prevent farmers selling their produce below MSP.

"We have been unable to sell the procured stocks as there is no parity in the market. The cost of imported soyabean oil and RBD palmolein are lower at Rs 48 and Rs 32 a kg respectively," he said.

"Besides, prices being lower than our procurement rates, we are incurring carrying costs, including interest and rent for warehouses," he said.

As a result, Nafed could incur a loss of Rs 1,000 crore on mustard procurement. Losses incurred by agencies such as Nafed on such price support schemes are re-imbursed by the Centre. Costs on interest and warehouse rent are being put at Rs 15 a quintal.

"We had tried to export mustard by floating tenders. But export rates were around Rs 1,150 only," Mr Ranjan said.

Nafed sees a tough problem to tackle this year with a mustard crop of over 70 lakh tonnes being projected again. A favourable soil moisture following good monsoon and increase in coverage of the crop are seen as pointers towards another bumper mustard crop.

"With another good crop in the offing and our warehouses, particularly in Rajasthan, we will have to find ways to dispose of our stocks as early as possible. We will resume selling the stocks from June," he said.

Currently, mustard is ruling at Rs 1,600-05 in Hapur and 1,550-650 in Delhi. On NCDEX, it is quoted at Rs 341 for 20 kg for delivery in May and Rs 328 on MCX.