Oil mills face heat as farmers refuse to sell below MSP

Edible oil mills in Gujarat, Rajasthan and Madhya Pradesh are in the doldrums with farmers refusing to sell their produce of soybean, groundnut and rapeseed below the minimum support price.

The arrivals of these commodities in the major mandis have fallen considerably and the oil mills, which were operating at a 75 per cent capacity, are finding it difficult to continue production.

Arrivals of soybean in Madhya Pradesh have fallen below 10,000 bags from 15,200 bags in the last week while groundnut arrivals at Rajkot have dipped to 7,000 bags from 20,000 bags. In Rajasthan, soybean arrivals to mandis plunged to 12,000 bags from 25,000-30,000 bags.

BV Mehta, Executive Director, Solvent Extractors’ Association, said there is a kind of crisis in the edible oil sector with short supply of oil seeds and the Government has to step in faster to resolve it, otherwise farmers will switch to other crops next season.

In line with the international markets, soybean prices have fallen to ₹2,600 a quintal against the MSP of ₹2,775, while ground nut and rapeseed prices are down to ₹3,550 and ₹3,300 a quintal against the MSP of ₹4,220 and ₹3,700 a quintal.

Atul Chaturvedi, President, SEA, said there is hardly any Market Intervention Operation by the Government to support MSP.

“While we appreciate the Government’s decision to raise the MSP to support farmers in the kharif season, there is an urgent need to strengthen the procurement system, otherwise it will not benefit the farmers,” he said. This apart, the demand for edible oil from the dealer end has slowed down ahead of the GST rollout from July.

There could be minor disruption in supply over the next few days as some of stockists are cutting down on their inventory due to confusion over tax treatment of inventory under the GST regime, said Mehta.

“Once GST is rolled out, things will settle down and there will be more clarity,” he said.

The Government has proposed a GST of 5 per cent on oilseeds and oils and 18 per cent on blended oil and margarine.

“While the government has yielded to our demand to reduce GST on blended oil to 5 per cent, it is yet to act on our plea to make oilseed GST nil,” he said.