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At a time, when farmers explore various profitable crop options for cultivation during the upcoming kharif sowing season, the sustained lower prices of oilseeds may potentially make farmers disinterested towards oilseeds cultivation thereby putting India's edible oil security at risk.
Key edible oil prices including soybean, rapeseed and groundnut prices have declined in the range of 20-28 per cent since June last year. Against the Minimum Support Price (MSP) of Rs 2,775 per quintal soybean prices quoted at Rs 2,550, while rapeseed prices hovered around Rs 3,250 a quintal against its MSP of Rs 3,700 and groundnut prices quoted at Rs 3,500 a quintal against the MSP of Rs 4,220 a quintal.
The SouthWest Monsoon has already marked its entry from Kerala and is expected cover the whole country in the next 10-15 days. "However, the current price level is the lowest in the last five years and farmers are totally discouraged to sow the oilseeds in the current kharif season. Further, there is hardly any market intervention operation to support the price level," said Atul Chaturvedi, president, Solvent Extractors' Association of India (SEA).
In a letter written to the Prime Minister Narendra Modi, Union Finance Minister Arun Jaitley and Agriculture Minister Radha Mohan Singh, the SEA raised key concerns of sustained lower prices below MSP of the oilseeds.
"After two years of drought, the current year witnessed Oilseed production rebounding. However, the increase in production has not brought any cheer to our farmers as prices have collapsed below the MSP levels .This has happened probably for the first time in decades and needs immediate action," SEA wrote in its letter dated June 5.
SEA also suggested remedial measures to ensure farmers do not lose interests in oilseed cultivation. "Import duties on crude oils should be raised to 20 per cent from a level of 7.5 per cent on crude palm oil and 12.5 per cent on soft oils with immediate effect. Import duty on refined oils should be raised to minimum 35 per cent from current level of 15 per cent on palmolein and 20% on other refined oils," the letter read.
Meanwhile, as the companies prepare for the rollout of Goods and Services Tax (GST) from next month, the purchases have come to minimal thereby putting additional downward pressure on the oilseeds.
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