Mustard prices rule below MSP despite govt intervention
Mandi prices for mustard seed remain 10-12% below MSP despite government procurement efforts. Lower prices linked to slow purchases, bumper output, and increased edible oil imports. India’s mustard seed output projected at a record 12.08 MT. Government extends lower import duty structure for edible oils. Retail inflation in mustard oil declines by 15.14% in March 2024. India imports 58% of annual edible oil consumption.
Mandi prices of mustard seed are ruling 10-12% below the minimum support price (MSP) despite the government initiating procurement of oilseeds under the price support scheme (PSS) operations.
Trade sources attribute lower price realisation by the farmers to sluggish pace of government purchase, bumper output and cheaper imports of edible oils.
Officials said that the two agencies farmers’ cooperative Nafed and National Cooperative Consumers Federation (NCCF) in collaboration with state agencies has purchased 0.56 million tonne (MT) of mustard seed this season under PSS operations in Madhya Pradesh, Uttar Pradesh, Gujarat, Haryana, Rajasthan and Assam.
However, major purchases of mustard so far have been in Haryana (0.32 MT) and Madhya Pradesh (0.11 MT). The agriculture ministry has sanctioned the purchase of 2.84 MT of oilseeds variety under PSS in the current season over the next two months.
Average mandi prices of mustard seed, at Bharatpur (Rajasthan), the hub of the country’ trade, was Rs 5013/quintal on Tuesday against the MSP of Rs 5650/quintal for 2023-2024 season (April-June).
“The government purchases so far have been sluggish and because of lower quantity of purchase from the registered farmers have forced them to sell their commodities at below MSP prices in the market ,” Roop Singh, CEO, Uttan Mustard Producers Company, a FPO based in Bharatpur, told FE.
In February, 2024, agriculture minister Arjun Munda had announced that the Centre would purchase mustard directly from farmers at the MSP aimed at bringing stability in the market.
Last year the government could purchase only 1.15 MT of mustard from the farmers under PSS. While in 2020 and 2021 the farmers have received remunerative prices which were reasonably above the MSP, prices have been ruling below MSP since last year as there has been an increase in imports of edible oil as global prices have softened and the government has slashed import duties.
The Solvent Extractors Association, a leading body associated with the edible oil industry in its first estimate has projected mustard seed output at a record 12.08 MT for 2023-24 season, 7% up on year.
The agriculture ministry, as per the second advance estimates of crop output recently, had projected mustard seed production at a record 12.69 MT in the 2022-23 crop year (July-June).
India’s import of edible oils – palm, soybean and sunflower – rose 17% on year to a record 16.47 MT in the 2022-23 oil year (November-October), helped by lower import tariffs of only 5.5% on crude oil imports.
The government has extended the lower import duty structure for palm, soybean and sunflower oils till March 31, 2025.
Due to large import of edible oil, the retail inflation in oil and fat category had been in the negative zone since February, 2023. Retail inflation in mustard oil in March, 2024 declined by 15.14% on year.
India imports about 58% of the total annual edible oil consumption of around 24 to 25 MT. Share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.
Source Link: https://www.financialexpress.com/policy/economy-mustard-prices-rule-below-msp-despite-govt-intervention-3467428/
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