Shah directs Nafed, NCCF to eliminate middlemen, buy pulses and oilseeds directly from farmers

The Ministry of Cooperation directed NAFED and NCCF to procure all pulses and oilseeds directly from farmers within two years, eliminating intermediaries fro...

What Happened

The Ministry of Cooperation directed NAFED and NCCF to procure all pulses and oilseeds directly from farmers within two years, eliminating intermediaries from the supply chain.
Payments to farmers are to be credited directly into their bank accounts, with a target of completing transactions within 48 hours of procurement.
Four new digital platforms were launched: Nafex.in (transparent online auction portal for procured commodities), Drishti (digital inventory management and ERP system for real-time stock analysis), a real-time data analytics tool, and the NAFED Kalyan Fund (channelling 1% of NAFED profits as scholarships for children of farming families).
India currently imports approximately 6–7 million tonnes of pulses and 15–16 million tonnes of edible oils annually; the directive is positioned as a step toward reducing import dependence.
NAFED's annual turnover has risen from ₹500 crore to ₹30,000 crore in FY25, with a target of ₹50,000 crore; the organisation now serves approximately 76 lakh farmers.

Static Topic Bridges

NAFED and NCCF — Mandate, Structure, and Role in Agricultural Marketing

The National Agricultural Cooperative Marketing Federation of India (NAFED), established in 1958 under the Multi State Cooperative Societies Act, is the apex organisation for agricultural marketing cooperatives in India. The National Cooperative for Exports and Federation of Farmer Producer Organisations (NCCF) is the National Cooperative Consumers' Federation of India. Both organisations function as Central Nodal Agencies under the Ministry of Cooperation and the Ministry of Agriculture.

NAFED is the nodal agency for procurement of 16 notified agricultural commodities under the Price Support Scheme (PSS), including oilseeds, pulses, and cotton, plus sole nodal agency for milling copra and coconut.
NCCF handles consumer cooperative functions and has been increasingly deployed alongside NAFED for procurement operations.
Both operate under the administrative oversight of the Ministry of Cooperation (created in 2021) in addition to the Ministry of Agriculture and Farmers Welfare.
Nafex.in replaces private auctioning services (mjunction, NEML, etech) previously used for approximately 20 lakh tonnes of commodities annually.

Connection to this news: The directive to eliminate middlemen within two years represents a structural transformation of how these agencies operate — moving from mandi-based procurement through agents to direct farmer-to-organisation digital transactions.

PM-AASHA and the Price Support Scheme (PSS)

The Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA), launched in September 2018, is the overarching framework that integrates multiple sub-schemes to protect farmers from distress sales when market prices fall below the Minimum Support Price (MSP). PSS is one of its four components, alongside the Price Deficit Payment Scheme (PDPS), Price Stabilisation Fund (PSF), and Market Intervention Scheme (MIS).

PSS is operationalised when mandi wholesale prices fall below the notified MSP during peak harvesting; NAFED and NCCF are mandated to procure at MSP.
PDPS directly transfers the difference between MSP and market price to registered farmers (without physical procurement) — but is limited to oilseeds.
PSF (administered by the Department of Consumer Affairs) maintains buffer stocks of pulses (tur, urad, chana, moong, masur) and onion to check consumer-side price spikes.
MIS covers perishables (tomato, onion, potato) for which no MSP is fixed, operated on state request.
Total financial outlay: ₹35,000 crore for the 15th Finance Commission cycle (up to 2025–26).

Connection to this news: The directive addresses a persistent gap in PM-AASHA implementation: even when PSS procurement is triggered, physical intermediaries delay payments to farmers. The two-year direct-procurement mandate with the 48-hour payment target is designed to close this operational gap.

MSP Framework — Who Recommends, Who Approves

The Minimum Support Price (MSP) is announced by the Union Cabinet on the recommendation of the Commission for Agricultural Costs and Prices (CACP), a statutory advisory body under the Ministry of Agriculture and Farmers Welfare. MSP is announced for 23 crops including 7 cereals, 5 pulses, 7 oilseeds, and 4 commercial crops.

CACP takes into account A2+FL costs (actual paid-out cost + imputed value of family labour), C2 costs (comprehensive cost including imputed rent and interest on own capital), and market intelligence before recommending MSP.
The National Commission on Farmers (Swaminathan Commission, 2006) had recommended MSP at C2+50%, which remains a contested demand.
CACP is not a body that procures — it only recommends; procurement is via NAFED/NCCF under PSS or via FCI for cereals.
MSP itself has no statutory backing: it is an administrative price, not a legal guarantee of purchase.

Connection to this news: The direct procurement directive attempts to make MSP operationally effective by removing the intermediary chain that currently absorbs much of the benefit before it reaches farmers.

Agricultural Marketing — APMC Framework and Reform

Agricultural Produce Market Committee (APMC) mandis are state-regulated primary wholesale markets where farmers are required (in most states) to sell through licensed commission agents. The middleman problem the directive seeks to address is structurally embedded in the APMC framework.

The Essential Commodities Act, 1955, and APMC Acts (state legislation) have historically mandated sale through mandis, creating commission-agent intermediaries.
The three farm laws of 2020 (repealed December 2021) sought to allow farmers to sell outside APMC mandis; their withdrawal meant the APMC structure remains the dominant channel in most states.
e-NAM (electronic National Agriculture Market), launched 2016, is a pan-India digital trading platform that integrates APMC mandis; it does not, however, eliminate physical intermediaries.
Nafex.in is specifically designed for NAFED-procured stock auctioning, not a farmer-to-consumer direct platform.

Connection to this news: The NAFED/NCCF direct-procurement model, if implemented within the two-year deadline, would constitute a parallel channel to APMCs for pulses and oilseeds specifically — one in which cooperative agencies transact directly with registered farmers, bypassing licensed intermediaries.

Key Facts & Data

Two-year deadline for NAFED and NCCF to implement fully direct farmer procurement
Payment-to-farmer timeline target: 48 hours of procurement
India's annual pulse imports: approximately 6–7 million tonnes
India's annual edible oil imports: approximately 15–16 million tonnes
NAFED turnover (FY25): ₹30,000 crore (up from ₹500 crore); target set at ₹50,000 crore
NAFED net profit (FY25): ₹405 crore (up from ₹139 crore)
NAFED net worth (FY25): ₹2,050 crore (up from ₹358 crore)
Farmers served by NAFED: approximately 74–76 lakh
NAFED Kalyan Fund: 1% of profits channelled for farmer-family scholarships
PSS total outlay (15th Finance Commission cycle): ₹35,000 crore
MSP crops notified: 23 (7 cereals, 5 pulses, 7 oilseeds, 4 commercial crops)
Nafex.in replaces private auctioning covering approximately 20 lakh tonnes annually