Agri Business

Farmers jittery as mustard oil demand plummets

Rutam V Vora | | Updated on: Mar 13, 2020

Mustard spot prices fall below MSP in a month, industry seeks bulk export of mustard oil

Projections of a bigger crop for Rabi 2019-20, coupled with the prospects of weak demand amidst the coronavirus crisis, have made mustard farmers jittery.

Spot prices in Bharatpur district, the largest mustard growing region in Rajasthan, are down by over ₹600 per quintal to ₹3,850 from ₹4,500 quoted about a month ago.

This indicates the prices have tumbled below the minimum support price (MSP) set by the government at ₹4,425 per quintal even before new arrivals hit the markets in bulk. As per the NCDEX data for Jaipur spot market, mustard seed (RM seed) prices slipped by over ₹200 from ₹4,279 a quintal on February 24, to ₹4,050 on Thursday.

“Prices have fallen sharply in the past one month. This is because of the reduced demand and higher crop prospects. There are fears that prices may fall further once the arrivals of new crop increase in a few days from now,” said Dalveer Singh, a farmer from Bharatpur and former chairman of the local APMC.

Crop damage suspected

However, Singh said the crop may have suffered some damage from the recent spell of unseasonal rains and hailstorm in parts of Rajasthan. “As of now, we don't have estimates on the quantum of damage but the crop condition might have been affected. So even if the new crop arrives, there is likely to be some support to the prices,” Singh told Businessline .

However, as per a recent crop survey jointly conducted by Mustard Oil Producers' Association (MOPA) and Central Organisation for Oil Industry and Trade (COOIT) across all mustard and rapeseed growing regions, the crop for the year 2019-20 is likely to be about 76 lakh tonnes, which is about a lakh tonne more than last year’s 75 lakh tonnes.

The acreage, has, however, marginally gone down from 69.79 lakh hectares across the country last year to 69.51 lakh hectares this year. MOPA-COOIT estimates have indicated an increase in production in Haryana and Uttar Pradesh, while it has projected a dip in Madhya Pradesh and same crop size in Rajasthan and Gujarat.

Deepak Kanda of Kanda Oil Industries in Rajasthan said exports of mustard oil is taking a hit due to increasing imports of other oils, including palm oil, and curbs on bulk exports of mustard oil.

Oil price fall

“The industry is unable to survive in such a scenario. In the past one month, mustard oil prices have fallen by about 20 per cent due to global weakness amid coronavirus scare. Chicago, Malaysia markets have been impacted and we are facing the direct brunt of it,” said Kanda, adding that if the overseas market opens up and Indian policies support bulk exports, there are bright chances to export huge quantities to West Asia, Bangladesh, Pakistan and other countries.

“Mustard oil has a distinct characteristic that provides flavour and crispiness to the food. This is suitable for fish-eating as well as other non-veg eating nations. So we stand to gain if their demand comes up and we are allowed to export in bulk quantities,” said Kanda, adding that India produces about 24-25 lakh tonnes of mustard oil annually.

SEA demand

Meanwhile, the Solvent Extractors' Association of India (SEA) has raised a demand with the Union Ministry of Commerce and Industry to permit exports of rapeseed/mustard oil in bulk without any restrictions of pack size and MEP (minimum export price) in line with other edible oils.

Currently, the rapeseed/mustard oil is subject to the condition of maximum pack size of 5kg for exports. All the other vegetable oils are permitted to be freely exported, irrespective of the pack size. As per the DGFT data, mustard oil (refined) exports were reported at 3,918 tonnes for the year 2018-19, while for the April-January 2019-20 period, the quantity stood at 3,158 tonnes.

Published on March 13, 2020
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