Why Nafed needs support package

The losses posted by the National Agricultural Cooperative Marketing Federation of India Ltd. (Nafed) in recent years have once again exposed the inefficiency of co-operative forms of business organisation in the country.

The only difference this time is that the case pertains to a giant and not a small co-operative.

On looking at the performance of the co-operatives in India, it could be found that even after 110 years since the start of the movement, Indian co-operatives have not progressed much, except a few.

Many a time, the failure of co-operatives has been attributed to uneconomic scale of business and lack of finance.

However, the case of Nafed tells a different story. It may require a bailout package from the Centre and the major reason behind need of such package is to mitigate the impact of loss incurred due to huge inventory that is yet to be liquidated.

During 2013-14 fiscal, the interest liability on outstanding loans in tie-up business resulted in a net loss of ₹166.14 crore, according to the disclosure by Nafed.

Domestic trade

The major business of Nafed i.e. procurement and sale has failed to reflect a better result in recent years.

Nafed has also been blamed for not synchronising its business operations in line with the need of State federation which has also resulted in discontent among the State level apex organisations.

Major businesses of Nafed is in the field of domestic trade in the form of outright business, joint venture business with member federation/societies, agency and consignment business and implementation of price support scheme/market intervention scheme of the Centre.

The procurement activity of Nafed is for mainly foodgrains, pulses, oilseeds, spices, cotton, tribal produce, jute & jute products.

Other business activities include international trade (export and import), supply of inputs to farmers and consumer marketing etc.

Inefficiencies in oilseeds During 2013-14, the Federation procured 3,83,472 tonnes of various oilseeds and oils valued at ₹1,693.49 crore.

In the same period, the sale of the same was limited to 81,949 tonnes, valued at ₹395 crore only. Major items procured in the oilseed category are groundnut pods and copra.

While groundnut accounted for 88 per cent of total volume and 86 per cent of the total value of oilseed procured by Nafed, the second major item (copra) was limited to the extent of 8.7 per cent of volume and 11.66 per cent of the value.

Other minor oilseeds procured were mustard, soyabean and sunflower.

Problems in pulses Purchases and sales of pulses have also been disappointing for federation as the total volume procured for different pulses was around 9,07,000 tonnes valued at ₹322.18 crore.

The sale was limited for around 79,000 tonnes with a total value of ₹293.27 crore only. The total sale of pulses during 2013-14 includes over 56,000 tonnes urad lying from the inventory of previous years, otherwise the sale of pulses during the year will be no more than 25 per cent of total procurement during 2113-14.

The procurement of pulses was done mainly for arhar and gram as the two contributed for around 91 per cent of the volume and 97 per cent of the total value of the pulses procured.

The unsold stock of these two pulses at the end of the fiscal was over 69,000 tonnes, triggering huge inventory carrying cost.

A serious concern Nafed was established with major objectives to organise, promote and develop marketing, processing and storage of agricultural, horticultural and forest produce, distribution of agricultural machinery, implements and other inputs, undertake inter-State trade, import and export, wholesale or retail businesses by its own and on behalf of its members and to act and assist for technical advice in agricultural production for the promotion and the working of its members and cooperative marketing, processing and supply societies in India.

Nafed's failure in performing efficiently will not be just failure of a national federation; indeed it will be failure of lakhs of co-operatives which are contributing in the enhancement of farmers’ life as well as consumer’s welfare.

The other reason attributed with the failure of Nafed is the approach which it follows in serving members spread across the country.

Unless and until a harmony is maintained and member organisations’ need is satisfied, Nafed will fail in performing its real function.

A serious thought must be given to prevent such happenings or else people will lose their faith from co- operatives which otherwise have already been criticised at different forum for various reasons.

The writer is associated with NIAM, Jaipur. Views are personal.

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