Steps to arrest decline in key edible oil prices soon
Govt to procure 2.7 MT mustard as prices fall below MSP
With mandi prices of mustard falling below the Minimum Support Price (MSP) of Rs 5,450/quintal after staying far above the threshold for over two years, the government has decided to procure 2.7 million tonne (MT) of the oilseed from farmers in key producing states namely Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana and Gujarat. The prices of soyabean, another key oil seed, have also fallen in recent months, but there is no plan to hike the import duty on these edible oils right now, official sources said.
The state co-operative marketing federations will be procuring mustard in collaboration with the farmers’ cooperative Nafed from April 1.
The Rajasthan state co-operative marketing federation (Rajfed) will purchase 1.5 MT of mustard at MSP from farmers.
Mandi prices of mustard at Bharatpur (Rajasthan), the hub of oilseeds trade, is currently ruling around Rs 5100 – 5200/quintal amid the prospects of a bumper harvest. Such prices are the lowest in two years.
The mandis prices in November last year was around Rs 7,500/quintal. The procurement will be carried out after a gap of two years. “Purchase by the government agencies are likely to push mandi prices above MSP,” an official told FE. MSP purchases of edible oils are very limited; in the last two years, mustard oil wasn’t purchased by the government as market prices remained firm.
Harvesting of mustard has been completed by farmers and the arrivals in mandis are likely to pick by middle of April.
“We expect the mandi prices to improve after April 1, after the government start buying from the farmers,” a spokesperson of P Mark mustard oil, a leading edible oil brand, said.
The agriculture ministry has estimated mustard seed production at a record 12.8 MT in the 2022-23 crop year (July-June). Area under mustard in the current rabi season has been reported at a record 9.8 million hectare (MH) which is 64% more than last five years’ average sown area of 6.4 MH. In the 2021-22 season, mustard sown areas stood at 9.1 MH.
Currently, Rajasthan (40%), Madhya Pradesh (14%), Uttar Pradesh (9%) and Haryana (7%), have 70% share in the country’s mustard seed production.Meanwhile a food ministry official on Monday ruled out possibilities of hiking importing duties on edible oil citing the need to balance between consumers’ and farmers’ interests.
The prices of soybean, another key oil seed, have fallen in recent months. Trade and processing bodies -Solvent Extractors Association of India and Soybean Processors Association of India (SOPA) have urged the government to hike the import duties on edible oil, especially palm oil to a minimum of 20% from the current level of 5.5%.
The government cut import duties on crude palm, soybean and sunflower oils in September 2022.
The landed prices of palm oil (at Mumbai port), which has close to 60% share in the country’s import basket, has declined by 46% to $ 975/tonne on March 24, against $1,828/tonne prevailed a year ago.
Landed prices of crude soy and sunflower have declined 43% and 54% to $1,050/tonne and $ 960/tonne respectively.
“This will not only be in the interest of farmers and consumers but will also give additional revenue to the Government,” SOPA has stated in a communication to Piyush Goyal, union minister of commerce and industry.
The retail inflation in mustard oil declined by 9.8% in February, 2023 against a year ago period.
India imports about 56% of the annual edible oil consumption of around 24 to 25 MT. The share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.
