Ending a trend of making losses for the last several years, farmers’ cooperative National Agricultural Cooperative Marketing Federation of India (Nafed) reported an operational profit of more than `106 crore in 2016-17. The turnaround was mainly because of more than a million tonne of purchases of pulses and oilseeds carried out on behalf of the Centre which paid it at cost plus 2% margin.
Faced with mounting debts because of a failed tie-up business about a decade ago, Nafed purchased close to nine lakh tonne of pulses from farmers last year in order to create a buffer stock. The prices of Pulses had skyrocketed from April last year, forcing the government to step up MSP operations. Besides, the farmers cooperative also purchased around 2 lakh tonne of oilseeds from the farmers, where Nafed intervenes on behalf of the government when mandi prices fall below minimum support price (MSP). The government had announced a Minimum Support Price of `5,050 and `5,225 per quintal for arhar and moong respectively in kharif, 2016.
According to un-audited financial results, Nafed reported a turnover of `5,771 crore in the last fiscal against a turnover of `396 reported in FY16.
“We have been carrying out a massive pulses procurement operations for creation of buffer stocks by providing more than 5 lakh farmers with MSP for their produce,” Sanjeev Kumar Chadha, managing director, Nafed told FE.
Because of outstanding debt from the banks, Nafed for the last few years had not been able to carry out commercial procurement operations for pulses, oilseeds, copra and cotton in large scale. However, the government’s decision to create a two million tonne buffer stocks by procuring lentils from farmers in key growing areas through agencies like Nafed, Food Corporation of India and Small Farmers’ Agribusiness Consortium helped the farmers cooperatives in its revival.
Meanwhile, the agriculture ministry is in the process of giving nod to provide the farmers’ cooperative a one-time interest-free loan of `478 crore against the original title deeds of its 17 freehold properties. The amount will be used to pay back Nafed’s debts as one-time settlements to eight lender banks who have failed to recover an accumulated outstanding dues of `1,600 crore. As per the proposal being worked out, Nafed would return the money from its own sources to agriculture ministry spanning over next 10 years.
Under the tie-up business, Nafed stood guarantor to unsecured loans of `3,900 crore availed by 29 private companies for undertaking exports in agricultural and non-agricultural items during 2003-2006. As several of these debtors, including the Swarup Group defaulted, the onus of interest payment fell on Nafed, which had a crippling impact on on the operations of the agricultural cooperatives business.