Centre faces consumer-versus-producer test as soyabean prices decline
The balance between producer and consumer interests isn’t an easy task. This is true especially in the case of farm produce that is which is trading close to the Minimum Support Price ( MSP) levels right now after having seen sky-high inflation up until recently.
Take the oil from soyabeans, which was priced at an all-India-average of more than Rs 171 for a kilogram in May, as per the Department of Consumer Affairs. This price has since fallen to around Rs 149-150/kg, which is lower than even the average of Rs 155 last year. According to the Food and Agricultural Organization’s price index of vegetable oils also, has dropped from a high that was 251.8 points back in the month of March, up to 152.6 points as of September.
The results of these and the calls to increase duty rates on imports of oil – are being observed on the Dewas APMC (agriculture produce market committee) mandi in Madhya Pradesh, where the new soybean crop is to arrive.
Jeevan Singh, a farmer from Bhojpura village located in Dewas district’s Tonk Khurd tehsil, has sold a tractor trolley-load of oilseeds for the price of Rs 4,785 for each quintal. His previous trolley, which was 35 quintals, sold for Rs 4,400/quintal at the end of September.
“Last season, last year I received the sum of Rs 5,950 to 6,000. I had sown at this time (on the 24th of June) hoping to get at least those rates,” says the 42-year old who has harvested 80 quintals in comparison to 70 quintal last year from his 20-bigha farm (1.75 bigha equals one acres). Farmers usually save a bit of their soyabean to plant seeds to plant the next crop.
The other customers are also dissatisfied. Subhash Chandra Kumawat (36) delivered two trolleys of 40 quintal each each at the wholesale mandi at this location which is one of the largest in India for soyabean. First trolley auctioned at an amount of Rs 4,880 per quintal, and the second at the sum of Rs 4,735. He had previously, around mid-September, sold a 40-quintal trolley for Rs 3,840/quintal which was less than the MSP of the government of Rs 4,300.
“That is geela maal (wet crop with around 20 percent moisture). These grains, however, having only 12% of moisture would have earned better price,” says this farmer from Bhatoni village in the Tonk Khurd Tehsil. Kumawat is also grown a larger crop of 300 quintals in his 70 bigha, as opposed to 200 quintal in the previous year. However, his harvests are lower than last year’s Rs 5,300-5600 range.
The current prices at Dewas which range from Rs 4,800 to 5,000 per quintal for soyabean that has 12-13% moisture, and 4,200-4,500 for 14-18% are in the middle of MSP. Market arrivals have not yet at their peak. According to those in the Dewas APMC, these totalled 15,74,431 quintal between 2021 and 22 (April-March). In the peak months of marketing between October and November, the daily averages exceed 30,000 to 40,000 quintal.
Suresh Mangal, a leading commission agent in Dewas who handles 400,000 quintals a year, estimates that only five percent of the crop of soyabean is reaching Mandis till now: “The extended monsoon rain has delayed the arrival of the crop. They’ll start to pick up after Diwali (on the 24th of October). However, this could put additional pressure on prices.”
Davish Jain, chairman of the Soyabean Processors Association of India (SOPA) believes that the Centre must decide soon whether to call for raising or restoring import duties on soyabean crude and sunflower oil. The Modi government on May 24, permitted twenty lakh tonnes (lt) each of the two oils to be imported with zero duty for 2022-23 as well as 2023-24. The decision was made at a time when prices were soaring in the wake of the Russian invasion of Ukraine and the ban of exports from Indonesia on palm oil.
The situation is now almost reversedand farmers have begun to be more irritable than consumers. “I pay today 2150-2250 rupees for a 15-kg container of refined soyabean oil, which was priced at Rs 2,600-2700 just six months ago. As a producer, the price I pay for soyabean matters for me.” says Rohit Gujjar. This 42-bigha farmer in Chandgarh village located in Tonk Khurd Tehsil has sold 40 quintals of high-moisture soyabean for less than the MSP. “I still have 80 quintal of soyabean to sell. The government needs to take action to help us achieve higher prices,” he says.
A SOPA delegation plans to meet with Commerce Minister Piyush Goyal on the 17th of October, to advocate for the increase of duty on edible oils. “We will also exert pressure. It’s in the best interest of our farmers,” Madhya Pradesh Agriculture Minister Kamal Patel told The Deccan Era.
Madhya Pradesh is India’s largest soyabean-producing state. SOPA estimates India’s total yield this year to be 120.4 Lt, a slight increase from 118.9 tonnes in 2021. This includes 53.3 lt (or 53.3 lt) from MP (52.3 lt in the previous year), 46.9 lt (48.3 lt) from Maharashtra and 9.8 lt (7 lt) from Rajasthan.
Soyabean prices in Dewas set a record at the price of Rs 11,111 per quintal on September 8 the previous year. This was the day when ex-factory prices of soyabean meal, the leftover cake following extraction of oil and used as a poultry and livestock feed ingredient – was ruled more than Rs 90 per kg. The prices are now lower than 40 cents per kilogram. The price of crude soyabean oil has decreased to Rs 122/kg, down from an initial price of Rs 155 in May.
Import duties could be increased to increase price for the farmers. However, whether the government or the Reserve Bank of India would prefer that, especially in the event that it leads to an increase in the price of edible oil is a different matter.