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  1. Oilseeds farmers move to other crops as prices plummet

Oilseeds farmers move to other crops as prices plummet

While consumers are enjoying lower prices of edible oils this year, the country’s oilseeds farmers are an unhappy lot, thanks to low returns on their produce.

Ahmedabad | Updated: August 18, 2017 2:47 AM
Oilseeds farmer, Oilseeds farmers, Oilseeds farmer india, Oilseeds farming, Oilseeds farming india, Oilseeds farm, Oilseeds farmers in india The current prices are the lowest in last five years and farmers are discouraged from sowing oilseeds, and instead, switching over to other crops.

Vimukt Dave

While consumers are enjoying lower prices of edible oils this year, the country’s oilseeds farmers are an unhappy lot, thanks to low returns on their produce. Huge domestic production of oilseeds and good availability of cooking oils globally have increased India’s edible oil imports, leading to a plummeting of oilseeds prices below the minimum support price (MSP) here. India is the largest cooking oil importer and the country imports about 60-70% of its total edible oil requirements. This year, imports have gone up by 4.44% to 11.38 million tonne (MT) in the first nine months of oil year 2016-17 as against 10.90 MT in the corresponding period of 2015-16. During May, June and July, edible oil imports have increased by 35%, 15% and 34%, respectively.

At the same time, domestic production of oilseeds has increased by 28.79% to 32.52 MT in 2016-17, thanks to record production of soyabean, groundnut and mustard. Last year the figure stood at 25.25 MT.

As per the third advance estimate of India’s agriculture department, soyabean production is estimated at about 14 MT this year as against 8.57 MT last year. Groundnut production has been estimated at 7.65 MT against 6.73 MT and mustard production at 7.97 MT as against 6.79 MT. Currently, soyabean, rapeseed and groundnut are being sold below MSPs and prices have dropped nearly 20-30% below last year levels.

The current prices are the lowest in last five years and farmers are discouraged from sowing oilseeds, and instead, switching over to other crops. Groundnut prices are ruling at Rs 3,000-3,250 per quintal in August this year which was about Rs 3,800-4,000 in the corresponding period last year. Similarly, soyabean is quoted at Rs 2,900-3,050 per quintal as against Rs 3,700-3,770 per quintal in the said period. “The biggest reason for the fall in oilseeds prices is huge domestic production. This has depressed the prices and farmers have not received returns as per their expectations. Farmers’ discouragement is also being reflected in the ongoing sowing progress,” said BV Mehta, executive director of Solvent Extractors Association of India (SEA).

According to SEA estimates, the total import of vegetable oil is likely to be over 15 MT by the end of edible oil year 2016-17 as against 14.73 MT in 2015-16. According to the edible oil producers, the oil year is beneficial for the consumers as cooking oil prices have come down by nearly 15% from last year. Moreover, prices will not increase much due to duty hike.

Angshu Mallick, chief operating officer of Adani Wilmar, said, “Compared to last year, prices of cooking oils have declined by nearly 15%. International and domestic prices of edible oils are weak. Companies like us have passed on the discount in retail. The government has increased the import duty but as the stock is available and supply is also more than sufficient, prices of edible oils may not go up in a big way.”

To control the falling prices, the government recently hiked edible oils import duty and this has halted the slide in oilseed prices. But the oilseeds industry believes the government decision has come quite late. Prices are now stable but most farmers have sold their produce at lower prices.

Saniv Sawla, chairman of Indian Oilseeds and Produce Export Promotion Council (IOPEPC), said, “We had demanded a hike in import duty on edible oils to control the falling prices of oilseeds in the domestic market. However, the government has responded late. Farmers have already lost profit margins considerably and several of them have diverted to other crops.”

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