After doubling the import duty on wheat to 20 per cent on November 8, the Centre recently increased the import levy on edible oils to the highest level in a decade. The duty on soyabean imports was also raised to shore up falling prices and help farmers who were suffering due to cheap imports. But in both the cases, the duty hike came too late both, and is unlikely to help farmers.

Take soyabean oil. The domestic price in September was ₹65,000-66,000/tonne against ₹55,000/tonne in the international market. Thus, a duty hike was welcome, oonly it came a tad late for farmers to be happy.

The import duty hike has raised soyabean prices in the spot market 5-6 per cent to ₹2,800/quintal, compared to a week ago. But given that farmers have already sold much of their harvest, the price increase has failed to cheer them.

Soyabean is a kharif crop harvested in September/October. Much of the output comes to mandis in October itself and the leftovers in November.

“If they wanted farmers to benefit, they should have done the import duty hike in October or before. They should ideally do it when announcing the MSP, which is before sowing. Had they done it then, it would have given a direction on prices to farmers, but now it is benefiting only traders,” says Vijay Sardana, an agri-market expert and member of the SEBI Commodities Derivatives Advisory Committee.

According to him, the recent duty on edible oil imports will take a month to fully reflect in spot prices as people cannot stop the consignments already ordered; and by the next one month the arrival season would be over.

In August, the Centre had increased the import duty on soyabean from 12.5 per cent to 17.5 per cent. Prices did receive some boost then, but soon dropped, signalling that it was not enough to bridge the gap between international and domestic prices.

In the case of wheat, it was a bigger slip-up.

In December 2016, import duty on wheat was cut to zero from 10 per cent. This saw 57.49 lakh tonnes of wheat coming into the country in 2016-17 — the highest at least in the last seven years. The domestic production too hit a record that year with an output of 98.38 million tonnes, up from 92.29 million tonnes the previous year.

So, India stepped into 2017-18 with a large stock, and, the powers-to-be fully aware of it. In March this year, the Centre imposed an import duty on wheat — but only 10 per cent, against the market’s expectation of 25-30 per cent. Wheat imports did come down post-March, but did not stop. Between April-September this year about 6.54 lakh tonnes of wheat came into the country, data show.

So, given the already surplus stocks, traders would not have imported wheat even otherwise.

This is why the import duty hike hasn’t swayed the market much. Over the past few weeks, prices have remained more or less unchanged.

Prices in Kota, Rajasthan, which were ruling at ₹1,630-40/quintal before the duty hike, are now at ₹1,635/quintal.

“Had they increased the duty on wheat to 25 per cent in March itself, they could have stopped further piling up of imports. In the last eight months domestic stocks would have actually been used up significantly and, by this time, prices would have actually gone up. The move came-in too late,” said a large wheat trader in Kota who supplies to mills in South India.

Related Topics
comment COMMENT NOW