Poor rains to hit expansion: Nafed

Agriculture co-operative Nafed on Wednesday said its businesses and expansion plans will be impacted if monsoon remains erratic and pitched hard for interest-free loans of Rs 1,200 crore (Rs 12 billion) from the Centre to erase bad debts.

"Nafed's business will be hampered due to poor monsoon. When (there is less rain), the purchase by Nafed will take a hit even though demand will continue to be there. Hoarders may also play a role and the prices will go up, affecting consumers," Nafed chairman Bijender Singh said here at the inauguration of the co-operative's retail outlet Nafed Bazaar.

If prices go up, Nafed's MSP operation (the purchase of farm commodities at support prices) will not take place, Singh explained, adding that commercial purchases will also take a hit.

The chairman said the agri-cooperative is estimated to have posted losses of Rs 95 crore (Rs 950 million) in 2008-09, compared with Rs 56.69 crore (Rs 566.9 million) in 2007-08.

In such a situation, Nafed is pinning hopes on monsoon to sustain businesses and offset some losses on failed tie-ups under which it had released advances to private firms to undertake import and export, and those defaulted on payments.

The co-operative is now lobbying for an interest-free loan of Rs 1,200 crore with the Centre to erase bad loans and offers to repay them in 10 years.