The Hindu Business Line : Long-term policy must for oilseeds sector

A PARLIAMENTARY Standing Committee on the Ministry of Agriculture is reportedly `perplexed' at the seemingly anomalous situation of continuing edible oil imports even when domestic oilseed prices rule below the minimum support price (MSP) fixed by the Government.

Currently, the open market price of rapeseed/mustard is around Rs 1,600 a quintal even when the MSP is higher at Rs 1,700, necessitating price support operations by Nafed.

The committee has favoured a long-term policy on the import of edible oils and oilseeds — a policy that upholds the interest of small and marginal farmers.

Without doubt, a long-term policy is indeed the need of the times.

There are serious issues that confront the country's oilseeds and vegetable oil sector; but, if the past is any guide, nothing significant is likely to happen. This correspondent was part of the `expert group' constituted in 1997-98 by the then Ministry of Food and Civil Supplies to evolve a long-term policy for the country's vegetable oil sector.

Several meetings and discussions were held and copious notes prepared by the group that included representatives of various ministries including agriculture. The report went into cold storage. Clearly, policymakers seem to be paying lip service to oilseed growers rather than pursue growth-oriented policies.

Much water has flowed under the bridge in the last six years. It is now more urgent and relevant to examine structural and other issues of the oilseeds-based sector and evolve long-term policies with a view to making the sector globally competitive.

Issues of importance spawn the entire supply chain — from primary production, processing to marketing and consumption. Basic thrust should be on measures to raise yields from the present abysmally low levels, improve the quality of produce, improve marketability of oilseeds, and ensure remunerative prices to growers.

At the processing level, consolidation of fragmented capacities to bring about scale economies, modernisation of processing units and monitoring of product quality deserve attention. In the area of distribution and consumption, there is a strong need to reduce the skew in edible oil consumption among different income groups to ensure nutrition security.

The ad hoc approach of the Government so far must give way to an integrated or holistic approach with a view to finding end-to-end solutions with a long-term perspective.

For this purpose, evaluation of the requisite resource needs is necessary — financial, human and technological resources.

On the committee's concern over the current situation of low oilseed prices, a close scrutiny of facts would reveal that far from being anomalous, the situation is of the Government's own making.

In its zeal to be seen as the champion of farmers, the Government has been raising the MSP for rapeseed/mustard year after year for last three years by Rs 100 a quintal or Rs 1,000 a tonne, without any concern for crop economics or domestic and international market conditions.

The Government could not strike the golden mean between high prices for oilseed growers and reasonable prices for edible oil consumers. High MSP supports domestic farmers, while low priced edible oil import supports consumers.

The country's oilseeds-based sector is crying for policy attention. Policy support is necessary to make it globally competitive. Perfunctory approach of the last several years has led to the present situation.

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