The size of the rapeseed/mustard crop under harvest this rabi season has been a topic of intense discussion and speculation in the oilseeds industry and trade circles in recent weeks.
According to the Agriculture Ministry's second advance estimate issued on February 3, the crop size is 75 lakh tonnes, well below the target of 81.9 lakh tonnes.
Last year (2010-11), according to government's final estimate, rapeseed/mustard output reached a record 81.8 lakh tonnes. Simply put, according to the government, this year's rapeseed/mustard crop is down by 6.8 lakh tonnes.
However, the oilseeds trade has other ideas. Several traders this correspondent spoke to mentioned that the crop size would be about 55 lakh tonnes. But these are at best guesstimates, and may have been driven by trading positions.
The Solvent Extractors' Association of India, based on a recent crop survey, has estimated the crop size at 62.6 lakh tonnes. This is 5.9 lakh tonnes less than last year's 68.5 lakh tonnes. The apex body of the nation's oilseeds trade and industry, the Central Organisation is yet to hold its rabi oilseeds seminar where crop estimate is arrived at.
While the actual crop size may be a matter of debate, what emerges from the foregoing is that both government and trade estimates this season point to a decline of anything between 5.9 lakh and 6.8 lakh tonnes in rapeseed/mustard production. This translates to over two lakh tonnes of oil.
Even going by the government estimate, a disconcerting feature is that the overall oilseeds production during 2011-12 is set to decline by a sizeable 20 lakh tonnes, equivalent to roughly six lakh tonnes of oil. Groundnut shows a sharp decline of 13.2 lakh tonnes to 69.4 lakh tonnes. There is also apprehension that the soyabean crop estimate of 120.7 lakh tonnes may have been slightly overstated. So, in the coming months, vegetable oil availability is most likely to get tighter. This has implication for market prices. Edible oils have a high weightage in the consumer price index. May, June and July are summer months when traditionally vegetable oil consumption falls. But these months are crucial because of the southwest monsoon – forecast, onset and progress.
Already there are apprehensions of some abnormality in rainfall in the ensuing season. It is also expected that the base effect of food inflation felt in recent weeks will soon start to wane. Strident rise in crude oil prices is likely to lift vegetable oil prices globally. These challenging times call for utmost caution on the part of policymakers and attention to the emerging situation. Speculative tendencies need to be curbed strongly and consumer welfare advanced.