A week after restricting futures trading on some agriculture commodities and extending the deadline for duty free pulse imports till March 2022, the Centre has now imposed stock-holding limits on soyameal, in a bid to control its prices. The stock holding limits will be in place till June 30, 2022.
A notification issued by the department of consumer affairs, food and public distribution stated that soyameal millers, processors or plants can hold stocks of up to 90 days of production. Traders and trading companies or private chaupals can hold only up to 160 tonne of soyameal with a defined and declared storage location, it said.
In case of stocks held by these respective legal entities are higher than the prescribed limits, then they shall declare the same on the government portal of the department of consumer affairs & pubic distribution and bring it to the prescribed stock limits within 30 days of the issue of the notification. It shall be ensured that the soyameal stock is regularly declared and updated on the portal and data on the portal will be regularly monitored by the department of animal husbandry & dairying and any other follow-up action will be taken by this department, the notification said.
Soyameal is a key constituent of poultry feed meal and its rates are directly connected to soyabean prices because seed has more than 80% meal and 18% oil content in them. This season, despite a good harvest, soya bean prices have soared almost 76% in the domestic market, benefitting farmers on one hand but hurting the poultry industry on the other.
In October 2020, soyabean futures were trading close to Rs 3,800 per quintal, which spiralled to a record Rs 10,680 per quintal in August 2021 on lower output and strong demand from the poultry industry. Following this, the Centre first allowed import of 12 lakh tonne of genetically modified soyameal till January 31, 2022. However, till December, only around 8 lakh tonne have been imported. Speculative activity in the futures markets in the entire soyabean complex and also stock holding by traders have also been blamed for the sharp rise in prices by industry people.
Soyabean production is estimated to be 127.2 lakh tonne in the 2021-22 season, as per the agriculture ministry’s first advance estimate of this year’s kharif crop production. The estimate is only marginally lower than the 128.9 lakh tonnes produced last year. Traders believe growers are holding stocks in anticipation of better prices in the near future, which is resulting in lower supplies in the market.
DN Pathak, executive director, Soybean Processors Association of India (Sopa), says: “Soy processors do not stock soy meal. They cannot afford to stock finished product at huge inventory carrying cost. Soymeal is not an item for long storage even by traders. How this will help in controlling prices is not clear.” Pathak felt that that this move may bring back the inspector and raid Raj, which can only have a negative impact.
Sopa recently said the poultry industry’s latest soyameal consumption figures are highly inflated. The association also said that the rise in soyabean prices is not in the hands of the processors and it is not because of anything done by the processing industry and they have already flagged the issue of hoarding and undue speculation of soyabean futures. “Farmers cannot be forced to sell soyabean at MSP as desired by the poultry industry. Soyabean farmers have as much right to livelihood and get remunerative prices as poultry farmers,” the association said.
Nitin Kalantri, a pulses trader based out of Latur, said that the government is trying all means to bring down prices, but the real stockist this year is the farmer. “The farmer has held back 90% of the crop in anticipation of price rise. It is not clear if he will be willing to sale at lower levels,” he said. BV Mehta, executive director, Solvent Extractors Association of India (SEA) expressed the hope that the stockholding limits will only remain for the six-month period.