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Harish Damodaran

Nafed could still play saviour with its huge mustard stocks

New Delhi , Aug. 21

Kharif oilseeds sowing has declined by over 10 lakh hectares (lh) so far this year. Coming on top of a $100 a tonne rise in global crude palm oil prices in the last three months - courtesy, Malaysia's move to divert supplies for production of palm-based bio-diesel - this spells bad news for the Centre's efforts to curb inflation.

According to the latest official data, total kharif oilseeds acreage this year, as on August 18, was 152.66 lh, against the corresponding coverage of 162.85 lh in 2005. Much of this is on account of groundnut, whose coverage has plunged from 53.54 to 43.23 lh on drought conditions in Andhra Pradesh, with Anantapur, Chittoor, Kadapa and Prakasam districts experiencing a dry spell virtually throughout July. The progressive acreage in the State is down from 14.58 to 8.49 lh. Gujarat, too, has seen a fall in area from 18.08 to 16.55 lh, as farmers shifted from groundnut to cotton.

Soyabean area up

On the other hand, soyabean acreage has gone up from 76.10 lh to an all-time-high 79.53 lh. But this does not make up for the loss of groundnut area, as the oil content in soyabean is just 18 per cent, compared with 40 per cent for groundnut.

So, is edible oil headed the wheat and pulses way? Not really, claims Mr B.V. Mehta, Executive Director of the Solvent Extractors' Association of India (SEA). He bases his optimism on two factors.

Nafed stockpile

The first is huge mustard stocks with the National Agricultural Cooperative Marketing Federation (Nafed), which procured 21 lakh tonnes (lt) of rapeseed-mustard out of the total crop of 78.87 lakh tonnes in 2005-06. Adding the leftover stocks of 15 lt from the previous year, Nafed was holding some 36 lt of inventories as on June 1.

"Even now, they have some 28 lt of stocks, which is akin to a third crop in addition to the normal kharif and rabi. If they offload these intelligently, we will not see any price spiral during the festival season," Mr Mehta noted. This contrasts with wheat, where the Food Corporation of India's (FCI) stocks of 82.07 lt as on July 1 was half the required minimum buffer of 171 lt. And that explains the Government's inability to control wheat prices, despite allowing imports at nominal duty.

Heavy rains in Rajasthan

The second reason for optimism is the heavy rains in Rajasthan over the last 10 days. "That will ensure sufficient moisture for the mustard crop in the ensuing rabi season. And since they got good prices last time, we expect farmers to go in for large-scale sowing," Mr Mehta added.

Nafed procured rapeseed-mustard at the minimum support price of Rs 1,715 per quintal, against the Rs 1,400-1,500 rate at which it has been selling to extractors. With the recent price increase, Nafed can hope to cut its losses and reduce the exchequer's burden.

Even the diversion of groundnut area in Gujarat to cotton may not be all that bad, given that cottonseed contains 14-18 per cent oil.

More Stories on : Oilseeds & Edible Oil | Cultivation | Outlook

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