Mandi prices of mustard seeds continue to rule below the minimum support price (MSP) of Rs 5,450/quintal for the season, despite the government’s move to procure the oil seeds from the farmers after a two-year gap.
Prices of mustard at Bharatpur (Rajasthan) mandi, the hub of oilseeds trade, are currently ruling at around Rs 5,100-5,200/quintal, the lowest in two years.The mandi prices in November last year were around Rs 7,500/quintal.
While the government has set a target to procure 2.7 million tonne (MT) of the oilseed from farmers in Rajasthan, Madhya Pradesh, Gujarat and Haryana, the MSP purchases have been sluggish so far.
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The farmers’ cooperative Nafed in collaboration with the state agencies has purchased only 0.47 MT of mustard seed from farmers at MSP till Friday in four states.
“MSP purchase is slow in Rajasthan as the agency has fixed purchase ceiling of 25 quintal per farmer per day,” Roop Singh, CEO, Uttan Mustard Producers Company, an FPO based in Astavan village, Bharatpur, Rajasthan told FE.
Singh also said that mustard is being purchased from only 10 farmers per block per day in the state, thus forcing farmers to sell their commodity at the mandis below MSP.
“Cheaper imports of edible oil such as palm oil, along with low import duties, have resulted in decline in demand for the mustard seed this season,” Krishan Kumar Agarwal, president, Bharatpur Oil Millers Association, had said.
Meanwhile, the trade body Solvent Extractors Association of India (SEA), has communicated to the food ministry that mustard seed, which is being sold below MSP in mandis, could lead to reduction in area under mustard crop in the coming rabi season.
“Unbridled imports of palmolein is resulting in collapse of edible oil prices, which is impacting marketing of mustard at peak harvest time and causing distress to farmers,” Ajay Jhunjhunwala, president, SEA, had stated in a communication to the food ministry.
Processors and trade bodies have urged the government to raise import duties on edible oil so that domestic mustard seed could appreciate.
At present, crude palm, soybean and sunflower oils imports attract only 5% agri infra cess and a 10% education cess upon it, meaning a total tax incidence of 5.5%.
India imports about 56% of the annual edible oil consumption of around 24 to 25 MT. About 8 MT of palm oil is imported from Indonesia and Malaysia annually.
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The landed prices of palm oil (at Mumbai port), which has close to 60% share in the country’s import basket, declined by 44% to $1,000/tonne on April 28 this year, against the $1,791/tonne that prevailed a year ago.
Landed prices of crude soy and sunflower oil have declined by 50% and 55% to $960/tonne and $990/tone, respectively.
The agriculture ministry has estimated mustard seed production at a record 12.8 MT in the 2022-23 crop year (July-June).
Area under mustard in the 2022-23 rabi season has been reported at a record 9.8 million hectare (MH), which is 64% more than last five years’ average sown area of 6.4 MH. In the 2021-22 season, mustard sown areas stood at 9.1 MH.
The retail inflation in mustard oil declined by 14.65% in March 2023 against the year-ago period.
The share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.