Soybean prices in free-fall, farmers take to the streets

The issue, however, is likely to take a political turn, since soybean is one of the main drivers of the state economy
Dilip Kumar Jha & Shashikant Trivedi / Mumbai/ Bhopal Oct 12, 2012
Business Standard
Irked by the free-fall in soybean prices this harvesting season, farmers in Madhya Pradesh have started a mild protest across spot mandis, demanding a hike in purchase price from the state authorities. Soybean prices have fallen by a massive 35 per cent in the last three months.

Soybean in spot mandis is traded at between Rs 3,000 and 3,100 a quintal, substantially higher than the minimum support price fixed by the Union agriculture ministry at Rs 2,240 a quintal ahead of the last kharif sowing season. But, farmers have demanded the state authorities devise a formula through which they can fetch at least Rs 500 more a quintal. State authorities, however, have refused to intervene in the market, so far. Meanwhile, farmers are in the process of organising themselves for a massive protest on October 21.

The issue, however, is likely to take a political turn, since soybean is one of the main drivers of the state economy. A number of crushing mills have set up oil extraction units to transport refined soy oil, soy meal and other edible grade processed soya food that fetches massive income to the exchequer.

The major concern of the protesting farmers is the squeeze in their income due to a huge spurt in raw material prices, including labour, fertilisers and other inputs. For example, farmers bought soya seed at Rs 4,400-4,500 a quintal during the kharif sowing season. But, at the time of harvesting the price plunged to a low of Rs 2,600-2,700 a quintal, about a week ago. Although, the price has increased a bit since then due to lower supplies as a result of the ongoing inauspicious shraddh period, experts believe the commodity will decline in the coming days with farmers intensifying harvesting of the standing crop after a week. Labour costs have also increased along with the cost of fertilisers and transportation, adding to the overall input costs by at least by 30-40 per cent.

Currently, soybean arrivals are estimated at 600,000 bags (1 bag = 100 kg) across the country’s spot mandis, of which around 400,000 bags could be in Madhya Pradesh alone. But, arrivals may go up to 10 – 11 lakh bags as harvesting peaks, said Rajesh Agrawal, spokesperson of Indore-based The Soybean Processors Association of India (SOPA). Soybean output, according to a report by Nirmal Bang, is expected to set a new record at 11 million tonnes as against 10.1 million tonnes reported last year.

SOPA, however, estimates total soybean output at 12.6 million tonnes on better crop prospects due to timely revival of monsoon.

Acreage under soybean is estimated to rise by 3.76 per cent to 106.94 lakh hectares (ha) in 2012 compared to 103.06 lakh ha in the previous season, said Ankita Parekh, research analyst with Nirmal Bang.

Year 2011-12 was an excellent one for soybean growers as prices shot through the roof - rising by almost Rs 1,500 per quintal in just two months. A tight supply and demand scenario both in the domestic and international markets turned the sentiments in favour of the bulls. Weather irregularities added concerns to the already tight domestic scenario. Further, improved meal demand from India at a time of thin supplies augmented the price rise.