National Agricultural Cooperative Marketing Federation of India Ltd.(NAFED)

The National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) is a leading apex cooperative organisation in India engaged in the marketing, procurement, and distribution of agricultural produce. Established with the objective of promoting fair trade practices and safeguarding the interests of farmers, NAFED plays a vital role in agricultural marketing, price stabilisation, and implementation of various government schemes related to procurement and food security.

Establishment and Background

NAFED was established on 2 October 1958 under the Multi-State Cooperative Societies Act, 1958. Its formation was a significant step towards creating a national-level cooperative body that could strengthen agricultural marketing and ensure remunerative prices for farmers.
The Federation was set up by the Ministry of Agriculture and Farmers’ Welfare, Government of India, as an apex organisation of agricultural cooperatives. It functions through a network of State-level Marketing Federations, District Cooperatives, and Primary Agricultural Societies, forming a three-tier cooperative structure for marketing agricultural produce.
Headquartered in New Delhi, NAFED also has regional offices, branch offices, and storage facilities across major cities in India.

Objectives and Functions

The primary objectives of NAFED are to promote cooperative marketing of agricultural produce, protect farmers from market exploitation, and stabilise agricultural prices. Its key functions include:

• Procurement of Agricultural Produce: NAFED undertakes the purchase of notified crops from farmers at the Minimum Support Price (MSP) on behalf of the government.
• Price Support and Stabilisation: It acts as the nodal agency for implementing the Price Support Scheme (PSS) and the Price Stabilisation Fund (PSF) to prevent distress sales by farmers during periods of excess supply.
• Marketing and Distribution: The organisation facilitates the marketing of agricultural and horticultural products both within India and abroad.
• Storage and Warehousing: NAFED operates warehouses, cold storages, and godowns for the safe storage of commodities.
• Export and Import Activities: It deals in export of agricultural commodities and import of essential items such as pulses and edible oils to maintain market balance.
• Processing and Value Addition: NAFED is involved in setting up processing units for oilseeds, pulses, and other agricultural products to increase farmers’ returns.
• Promotion of Cooperative Marketing: It provides guidance, training, and financial support to cooperative societies for marketing-related activities.

Organisational Structure

NAFED operates as a national-level cooperative federation with the following structure:

• General Body: The supreme authority comprising representatives from member cooperatives and government nominees.
• Board of Directors: Elected representatives who formulate policies and supervise overall functioning.
• Managing Director: The chief executive responsible for operational management and implementation of programmes.

The federation has over 800 cooperative societies as members, representing farmers from across the country.

Key Government Schemes Implemented by NAFED

NAFED serves as the implementing agency for several government schemes aimed at agricultural marketing and price support:

1. Price Support Scheme (PSS):
   • Under the PSS, NAFED procures oilseeds, pulses, and copra directly from farmers at the MSP announced by the Government of India.
   • The scheme prevents market prices from falling below the MSP during harvest periods.
   • Losses, if any, incurred in the procurement process are reimbursed by the central government.
2. Price Stabilisation Fund (PSF):
   • Implemented to control volatility in the prices of essential commodities such as pulses, onions, and potatoes.
   • NAFED maintains buffer stocks of these commodities and releases them in the market during periods of shortage or price rise.
3. Operation Greens:
   • Under the Ministry of Food Processing Industries, NAFED acts as a nodal agency for managing the price stabilisation and distribution of perishable commodities such as tomatoes, onions, and potatoes.
4. National Food Security Mission (NFSM):
   • NAFED assists in the distribution of seeds, fertilisers, and inputs to enhance agricultural productivity.
5. Procurement under MSP Operations:
   • NAFED procures various crops on behalf of the Government of India and State Governments to ensure farmers receive fair and remunerative prices.

Role in Agricultural Marketing

NAFED is one of the largest procurement and marketing organisations for agricultural produce in India. It provides farmers with access to markets, ensures price stability, and helps reduce the role of intermediaries. The Federation engages in both domestic trade and international exports of agricultural goods, such as:

• Pulses (chana, tur, urad, moong)
• Oilseeds (groundnut, mustard, soybean)
• Cereals, spices, fruits, and vegetables
• Horticultural and allied products

NAFED also promotes cooperative marketing societies, providing them with infrastructure, storage, and financial support to improve efficiency and transparency in agricultural trade.

Financial and Commercial Operations

NAFED’s commercial activities include:

• Procurement and Sale: Buying commodities from farmers and selling them in domestic and international markets.
• Buffer Stock Management: Maintaining buffer stocks for government-mandated commodities.
• Import/Export Operations: Importing essential commodities during domestic shortages and exporting surplus produce.
• Agro-Processing Units: Establishing plants for oilseed crushing, food processing, and packaging.

It also operates subsidiaries and joint ventures in food processing, logistics, and agri-business to enhance value addition and profitability.

Role in Farmers’ Welfare

Through its price support and stabilisation activities, NAFED ensures that farmers receive remunerative prices even during periods of market distress. By directly procuring from farmers, it minimises exploitation by middlemen and ensures timely payments. NAFED’s interventions also help to:

• Reduce post-harvest losses.
• Maintain supply-demand equilibrium.
• Support farmers in remote and rural areas by providing marketing linkages.

Challenges Faced by NAFED

Despite its significant contributions, NAFED faces several challenges in its operations:

• Price Volatility: Managing fluctuating market prices and maintaining financial sustainability.
• Storage and Logistics Issues: Limited warehousing capacity and perishable nature of commodities.
• Financial Risks: Losses incurred during large-scale procurement operations.
• Dependence on Government Support: High reliance on central funding for price support operations.
• Market Competition: Growing presence of private players and e-marketing platforms.

Reforms and Modern Initiatives

In recent years, NAFED has undergone several reforms to modernise its operations:

• Digitisation of Procurement: Introduction of electronic payment systems for farmers.
• Integration with e-NAM (National Agriculture Market): Facilitating transparent and real-time trade in agricultural commodities.
• Diversification of Activities: Entry into bio-fertilisers, organic products, and processed food segments.
• Strengthening Cooperative Linkages: Providing training and support to primary agricultural societies to enhance cooperative participation.
• Export Promotion: Collaborating with international buyers to expand agricultural exports.

Significance in India’s Agricultural Economy

NAFED plays a pivotal role in stabilising agricultural markets, ensuring food security, and safeguarding the livelihoods of millions of farmers. By acting as a bridge between producers and consumers, it contributes to:

• Reducing rural distress and preventing exploitation.
• Promoting cooperative marketing and self-reliance among farmers.
• Ensuring stability in prices of essential commodities.
• Supporting the government’s broader objectives of Doubling Farmers’ Income and sustainable agricultural development.