MSP rise for oilseeds good first step: Industry

Dilip Kumar Jha / Mumbai Jun 15, 2012,
Business Standard
The significant increase in the minimum support price (MSP) for oilseeds would, it is felt, help to some extent in encouraging farmers to divert acreage to this crop from other bearish crops, such as cotton, during the coming kharif season.

For kharif oilseeds, the government raised the MSP by 21-37 per cent on Thursday, ahead of the sowing season. While the MSP for groundnut was raised 37 per cent to Rs 3,700 a quintal, that of soybean rose 30 per cent to Rs 2,200 a quintal.

“A good move but the increase should have been higher for oilseeds in which farmers’ interest has been waning for several years. For example, we would like to see more increase in the MSP for sunflower and safflower that have been losing farmers’ attention,” said Siraj Choudhary, CEO (Refined Oil), Cargill India.

The MSP for sunflower and safflower has been increased by 32 per cent and 29 per cent to Rs 3,700 a qtl and Rs 4,400 a qtl, respectively.

The agriculture ministry pegged India's total oilseed output at 30.5 million tonnes in 2011-12, down six per cent from the previous year. The output of rapeseed, a rabi oilseed crop, was pegged at 7.5 mt.

Assuming a normal monsoon and favourable growing conditions, total oilseed production in the marketing year 2012-13 (October-September) is likely to grow three per cent to 35.6 mt.

According to Gobindbhai Patel, an industry veteran, the spot price of all oilseeds has remained 25 per cent higher than the announced MSP. Since oil prices have been discouraging through the year, the MSP increase would have a limited impact on sowing decisions. The government’s decision, however, is a welcome step, he said.

India continues to remain highly dependent upon oil imports from major producing countries such as Malaysia, Indonesia and Argentina. India imports around 55 per cent of its annual edible oil consumption of 17.1 mt due to lower domestic output.

An official from Ruchi Soya Industries, one of the largest oilseed producers in India, said, “The government’s decision would help boost farmers’ sentiment despite the actual price of oilseeds being higher than the MSP.” Agreeing, B V Mehta, executive director of the Solvent Extractors’ Association (SEA), said, “The government must look at other initiatives, including increase in import duty and irrigation facilities to support the MSP initiatives, to make it successful.”

The government has increased focus on overall growth of oilseed output with special focus on the east, where a one-crop system continues due to lack of proper irrigation. With a special economic package announced for farmers in the east, the simultaneous increase in MSP wouldboost overall sentiment to sow more in the coming seasons, said Satyanarayan Agarwal, president of the Central Organisation for Oil Industry & Trade, the apex trade body in this sector.