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LATEST NEWS UPDATES | Price collapse: The MSP mirage -Parthasarathi Biswas

Price collapse: The MSP mirage -Parthasarathi Biswas

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published Published on Nov 24, 2017   modified Modified on Nov 24, 2017
-The Indian Express

Modi government’s decision to hike import duty on edible oils has come too little, too late for soyabean farmers

Latur:
Arun Kulkarni planted soyabean on 10 out of his 14-acre holding in the recent kharif season and harvested 65 quintals of the crop towards September-end. But unlike most of his neighbours, this farmer from Tandulja village in Latur — Maharashtra’s largest soyabean-growing district and the country’s No. 2 by area after Ujjain in Madhya Pradesh (MP) — decided not to sell in October itself.

“It didn’t make sense, as prices at the APMC (agriculture produce market committee) yard here were ruling at Rs 2,500-2,600 per quintal and have been at these levels in this month as well. Why should I sell at below even the Rs 3,050 MSP (minimum support price) declared by the government at Delhi?” points out Kulkarni.

He hopes to realise a better rate now, especially with the Narendra Modi government, on Friday, hiking the import duty on crude soyabean oil from 17.5 to 30 per cent and that on refined oil from 20 to 35 per cent. The basic customs duty was similarly raised from 30 to 45 per cent on soyabeans, from 15 to 30 per cent on crude palm oil, from 25 to 40 per cent on refined palm oil/palmolein, from 12.5 to 25 per cent on crude sunflower and crude canola/rapeseed/mustard oils, and from 20 to 35 per cent on refined sunflower and canola/rapeseed/mustard oils.

But Kulkarni admits that even if domestic soyabean prices were to go up due to imported oils/oilseeds becoming costlier, not many farmers would benefit. “About 60 per cent of growers in my village have already sold their crop. They needed ready cash, without which they couldn’t have bought their household provisions or seeds, fertilisers, pesticides and other inputs to plant chana (chickpea) and wheat in the current rabi season,” he notes.

Kulkarni could hold on to his 65 quintals, only because he grows sugarcane in his balance four acres. This cane he supplies to the Manjara cooperative sugar factory at Latur, which has already started crushing operations. “I will soon be receiving payment for my cane. Without that, even I would have had to sell all my soyabean at these very low rates,” he adds.

Maharashtra is India’s biggest soyabean-producing state after MP, with almost 90 per cent of its crop being cultivated in the largely rainfed and relatively backward belts of Marathwada (mainly Latur, Osmanabad, Nanded, Hingoli, Parbhani and Beed districts) and Vidarbha (Buldhana, Amravati, Akola, Washim and Yavatmal).

Soyabean prices this time were below MSP levels even during the sowing period in June-July. As a result, farmers planted less area under the crop compared to 2016 (see table). Lower acreage and output has, however, not helped lift prices. On Friday, just before the decision to increase the import duties, soyabean prices averaged Rs 2,600 per quintal at the Latur APMC. This Monday, they rose to Rs 2,700, before easing to Rs 2,680 per quintal the very next day.

The higher duty, in other words, hasn’t helped even farmers like Kulkarni, who are still to sell, to realise a price closer to the MSP. At the National Commodity and Derivatives Exchange, soyabean is at present trading above the MSP of Rs 3,050 per quintal only for the March 2018 futures contract. Obviously, not many farmers have the capacity to hold on to their crop for so long.

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The Indian Express, 23 November, 2017, http://indianexpress.com/article/india/price-collapse-the-msp-mirage-modi-government-soyabean-farmers-4950196/


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