The Hindu Business Line : Copra prices touch MSP levels

WITH copra prices touching the minimum support price (MSP) levels after a gap of more than two years, the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed), expects that it would not have to undertake intervention operations this time to prop up sentiments.

``We have last week obtained the required credit line approval from the Reserve Bank of India (RBI) to carry out copra purchases under the Centre's Price Support Scheme (PSS). Accordingly, we have instructed our regional offices to go ahead with procurement. But I don't think this would be necessary, given that open market prices have almost crossed MSP levels,'' Mr S.C. Singhal, Additional Managing Director (Oilseeds), Nafed, told Business Line.

Mill copra is now quoting at Rs 3,300 per quintal in Alappuzha (Kerala), which is equal to the MSP declared for 2001-02. For 2002-03, the Centre has not formally declared any MSP, even as Nafed has been asked to procure at last year's MSP of Rs 3,300 per quintal for mill copra and Rs 3,550 per quintal for ball copra.

The current market price of Rs 3,300 per quintal is a significant improvement over the corresponding 2001 and 2000 levels of Rs 2,175 and Rs 2,275 per quintal, respectively, though below the June 1999 high of Rs 3,540 per quintal. Coconut oil (ready), too, is now selling at Rs 4,600 per quintal, compared to their corresponding levels of Rs 3,075 and Rs 3,250 per quintal in the preceding two years. Prices had touched as high as Rs 5,275 per quintal in June 1999.

During the 2000-01 season, Nafed procured a record 2.32 lakh tonnes of mill copra worth Rs 778 crore. Considering that the purchases were made at the then MSP of Rs 3,250 per quintal, as against open market prices of Rs 2,100-2,200, the cooperative is estimated to have run up losses of around Rs 230 crore, forcing it to curtail its copra procurement operations last year to just 45,292 tonnes. This included 34,112 tonnes of ball copra and 11,180 tonnes of ball copra.

Under the PSS, all losses borne by Nafed are re-imbursed by the Centre. But given the magnitude of losses incurred in the 2000-01 season and the delay in the release of funds from the Centre, Nafed could not obtain the required working capital to undertake large-scale purchases last year. As a result, open market prices languished way below the MSP throughout the year.

``There is no problem of funds this time because not only have we disposed of the copra stocks from previous years' purchases, but even our outstanding re-imbursement claims have been more-or-less cleared. We have, therefore, been sanctioned adequate credit line limits from the RBI,'' Mr Singhal added.

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