Several soyabean crushing units in Maharashtra and Madhya Pradesh remain shut this season due to high price of soyabean, which has gone up to Rs 4,000 per quintal after the imposition of stock holding limits by the government and estimates of lower production owing to erratic rainfall, impacting yield.
Senior officials of the Soyabean Processors Association of India (SOPA) say prices have gone up 22% in the last month, leading to profiteering and hoarding by stockists. We were expecting prices to be in the range of Rs 3,200-Rs 3,400, but they shot upto Rs 4,000 per quintal making it difficult for crushing units to purchase raw material, DN Pathak, executive director, SOPA told FE.
The Association had earlier alleged speculation by stockists and had raised the matter with the Securities & Exchange Board of India (SEBI) , believing the stock limit may help free up the quantities held by stockists. We wanted seeds at a reasonable cost, especially the stocks which have been hoarded with the stockists, Pathak said.
He pointed out that although there has been a hue and cry from soyameal buyers about the high prices, not many are taking into account the fact that since the raw material purchase price itself is high, there is no way the plants can sell soyameal at lower prices.
“The country’s estimated production this season is around 74 lakh tonnes and there is a carryover of 5-6 lakh tonnes. So there is some 60 lakh tonnes to crush that would result in some 52 lakh tonnes of soyabean meal. There is enough soyabean meal for local markets. But it all depends on what prices the raw material is purchased,” he said.
Association chairman Davish Jain had earlier stated that more than 50% soyabean crushing plants have already closed down due to the speculation-driven price manipulation by some unscrupulous operators.
Industry experts pointed out that no industry can survive if it has to buy raw material at unreasonably high price and the ultimate sufferer will be the farmer if there are no buyers for soyabean. The industry is in crisis and closure of futures trading is the only way out to make the soya processing industry survive in these critical times, the association said.
There are currently about 117 soya processing plants in the country with a combined crushing capacity of 250 lakh tonne per annum. The industry produces goods worth R35,000 crore and exports products worth Rs 15,000 crore per annum, mainly soyabean meal. According to industry reports, the soya processing sector in Madhya Pradesh, which is estimated to be worth Rs 25,000 crore, is under extreme stress. Out of the 70 processing units in the state, 20 are not in a position to start production.
SOPA said production is likely to fall to 73.79 lakh MT. Last year production had touched 87.10 lakh MT. Pathak arrtibutes the fall in production to erratic rainfall. “The rains have been erratic this season. There was no rainfall at the start of the season and which was followed by rains and then a dry patch followed. Rains took place when they should not have as a result of which production has been affected in Madhya Pradesh and Maharashtra,” he said.