In an attempt to diversify its revenue channels, the National Agricultural Cooperative Marketing Federation of India (NAFED) has ventured into the production of bio-fertilisers, organic products and certified seeds. The managing director of the company, Sanjeev Kumar Chadha, talks to Ankita Saxena about the company's growth plans
After a stellar performance in the last three years, and with the support of the government, NAFED is set to record a turnover of Rs 20,000 crore and should be able to reach a profit of Rs 450 crore in this year. This is the first time that NAFED has posted such high profits. However, the managing director of the company, Sanjeev Kumar Chadha, understands that the company cannot remain dependent only on procurement and thus, has begun to diversify its revenue channels into retail, bio-CNG and is also exporting and importing agri products on behalf of the government. Edited excerpts from the interview:
NAFED is eying to set up 100 bio-CNG plants across the country. What is the update on this front?
The Ministry of Petroleum has come out with a policy to promote bio CNG in the country. The challenge in this sector till now was that the chain from the supply of raw materials to the final product was not getting completed. Thus, NAFED has taken up the role of the facilitator and we will be supplying the raw materials in the form of agri-waste from sugar mills, municipal waste and stubble from farmer’s fields. We have tied up with the municipalities in Ahmedabad and Jammu to provide us with segregated waste for the plants. We will also apply for all the statuary clearances for these projects and have tied up with technology and funding partners.
To make the projects financially viable, the government has offered us a very good off take rate of Rs 48 per kg for 10 years, following which, we have already signed an off take agreement with Indian Oil Corporation. The business model is independent of government subsidy. As of now, we have already applied for 12 such projects and actual work on these projects will begin soon. We will lay the foundation stone for one such project in western UP in the coming week.
India needs at least 5000-6000 such plants and for this to happen it is important that the funding source is not dependent on banks. Thus, we are looking at green bonds, UN funds and maybe even consider collaborating with IndianOil to jointly create a bond structure for these projects.
There is talk about the launch of NAFED’s own bio-fertiliser. What are the plans in place for this?
We are launching our bio fertilisers since fertilisers are going to be one of the bi-products at the bio-CNG plants. However, this fertiliser will need enrichment since it will come out of different types of raw materials. It will need addition of some inoculum, bacteria and others to make it rich and thus improve production. It is important to note that the bio-fertilisers have to be enriched and packed at the site of the bio-CNG plants to avoid transportation costs from other location, to make it competitive. As far as marketing it is considered, with our outreach with the farmers across the country and our established NAFED brand, we will be able to sell it easily. Also, Indian Oil has around 3000 Farmer Seva Kendras where we will be selling this product. It is estimated that once functional, the bio-CNG plants will generate employment for around 100-125 persons at a unit.
What type of certified seeds is NAFED supplying to the farmers?
We get the breeder seed from the Indian Council of Agricultural Research (ICAR), which is converted into foundation seed. This is used to produce the certified seeds which are then supplied to the farmers. India has become almost self sufficient in pulses in the last three years but, we are lacking in oil seeds. Currently, we import around 80 per cent of our requirement for oil seeds but, there is a lot of scope in this area for India. Self sufficiency for pulses was achieved by government’s emphasis on supply of seeds and its promotion but, the key was purchase. If the farmer is convinced that the government will buy his grains if the price is below the minimum support price (MSP), then he is incentivised to grow more. This has to be similarly applied to oil seeds.
We are producing certified seeds for pulses and oil seeds for this purpose and are supplying it to farmers. We have observed that many farmers in Uttar Pradesh have shifted from sugarcane to mustard production, which adds to their income. Also, growing legumes helps nourish the soil with nutrients. This can reduce the use of artificial nourishment and eventually improve the soil quality. Another area to explore is the demand for oil cake from China and other Asia Pacific countries, which is one of the bi products of the oil industry.
How are you planning to popularise the organic products launched by NAFED?
Under the NAFED brand, we have launched 90 new organic products, starting from seeds like flax seeds, chia seeds, tea, flour, pulses and so on. We have also partnered with e-commerce platforms like Grofers and Amazon. Our focus is to popularise these products in the physical markets in the states by making use of the distribution channel.
The challenge in organic farming is that the farmers who grow these products do not get the premium as paid by the consumers. To bridge the gap between the growers and the market, we have identified farmer co-operatives and farmer producer organisations who get the products certified and we are now sourcing the products directly from them. This way we are ensuring that the farmers are paid at least 20 per cent more for their products. Also, since we are able to make these products more competitive, we will be able to pass on the benefit to the end consumers as well. Recently, we participated in BIOFACH, the largest event in the world for organic food, to study and understand the international market in this segment. Since all our organic products are APIDA certified, we can also export these to meet the demand from the international markets like the Middle East.
Photo Credit: Pankaj Kumar