To achieve self-sufficiency in oilseeds, pulses govts must assure purchase

Though there has been an increase in acreage and production of these items, there hasn't been a big reduction in paddy and wheat acreage

On Sunday, the NITI Aayog Governing Council at its seventh meeting devoted a considerable amount of time to the topic of crop diversification and achieving self-sufficiency in pulses and oilseeds production.

States that are an integral part of the Council are believed to have sought the active participation from the Centre to hasten this process.

But, the challenge appears grave.

No material impact

There have been multiple efforts by the central and state governments to encourage farmers in the water-stressed states of Punjab, Haryana, and in western Uttar Pradesh, among others, to diversify from growing wheat and rice to more in-demand crops like pulses, oilseeds and maize.

However, so far, these efforts have been largely on the margins and any large-scale diversion through higher relative minimum support price (MSP) in oilseeds and pulses has not materialised.

Evidence suggests that though both acreage and production of pulses and oilseeds have seen significant increase in the last few years, this has not come at the cost of rice and wheat.

Between 2014-15 and 2020-21 (July to June), when MSP of paddy (common) was increased by almost 37 per cent, acreage under the crop dipped by just around 2.5 per cent.

In the case of wheat, while the MSP increased by 36.2 per cent during the period, there was a 10 per cent increase in area under cultivation.

In contrast, in the case of chana, between 2014-15 and 2020-21, while the MSP increased by almost 61 per cent, the area under the crop rose by 36 per cent. In the case of soybean, while the MSP increased by almost 51.5 per cent during the period, the area under the crop rose by just 10 per cent.

This clearly shows that while the MSP increases might have encouraged farmers to grow more pulses and oilseeds, they have not exactly been weaned away from paddy and wheat.

Unless backed by strong procurement mechanisms or ready markets, the MSP in isolation is not enough to encourage farmers to reduce cereal cultivation in favour of pulses and oilseeds.

A case in point is the growth seen in India’s pulses production in the past few years.

Several experts believe that India’s pulses production has risen from a mere 14-15 million tonnes (MT) to almost 22-23 MT in the last few years, lowering the country’s import dependency not just due to higher MSP but also because of an assured procurement system by state agencies, who need to fill the government’s requirement to maintain 2 MT of annual buffer.

This year, too, India’s mustard seed production has jumped manifold as prices in the open market for oilseeds have been remunerative for farmers.

PM-AASHA

In this regard, the performance of much talked about Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) – which lays down a framework for central intervention in the case of oilseeds, pulses and coarse cereal that fall below MSP – has been below par.

In a recent report, the Commission for Agriculture Costs and Prices (CACP) said the allocation for PM-AASHA has significantly declined from Rs 1,500 crore in 2019-20 to Rs 400 crore in 2021-22, while expenditure under the scheme has been extremely low.

“The scheme has great potential of benefiting farmers, but there is an urgent need to review PM-AASHA and address implementation issues,” the report said, recommending that the government form a committee of representatives from the central and state governments and the private sector to review the scheme and recommend changes to make it effective.

The CACP also found that despite a significant increase in the procurement of pulses and oilseeds in the past few years, market prices have remained subdued.

It also called upon state governments to be more proactive as the sanctioned quantity is lower than the procurement limit of 25 per cent of oilseeds and pulses production, while actual procurement is much lower even than the sanctioned quantity.

MSP coverage

Besides, the MSP now covers more farmers than before.

Data from the CACP, which is the main rate-setting panel for the government, shows that while in Punjab and Haryana roughly around 0.8-0.9 million farmers have benefitted from MSP in case of wheat in the 2020-21 season, it is in states such as Madhya Pradesh and UP from where the procurement has risen exponentially.

In MP, around 0.53 million farmers benefited from wheat MSP in the 2016-17 rabi marketing season, which rose exponentially to 1.6 million farmers in 2020-21 season, a rise of over 33 per cent in five years.

Similarly, in UP, too, procurement has risen manifold in the last five years. The number of farmers who have got MSP for wheat because of enhanced procurement has grown from 0.16 million to over 1.07 million.

A similar trend has been seen in rice procurement as well.

In fact, a news report published some months back showed that around 15-25 per cent of farmers benefited from the MSP mechanism that includes those who grow cotton and also dairy farmers who supply at a predetermined rate to dairies and cooperatives.

Palm oil mission

The other major initiative very recently announced to boost self-sufficiency in palm oil is revamping of the Oil Palm Mission with the objective of producing 2.8 MT of palm oil locally by 2025-30.

According to some experts, one hectare of oil palm produces the same quantity of edible oils as one gets from 6-8 acres of mustard or any other oilseeds.

However, some industry players say that even if the mission succeeds, it will not be enough to significantly lower India’s import dependency.

The Solvent Extractors Association (SEA) in a recent presentation said that by 2025-26, India’s domestic edible oil demand will be around 26 MT, of which just around 13 MT will be met through domestic production of oilseeds.

Therefore, import reliance will continue to be around 12-13 MT even in 2025-26, the SEA said.

Rice bran oil

The third major way in which policymakers are looking to boost domestic edible oil availability is by raising rice bran oil production from the current 1-1.1 MT per annum to 1.8 MT.

However, taking the production beyond the targeted 1.8 MT so that it makes some tangible impact on the domestic edible oil availability is a big challenge as trade sources said for this to happen, domestic rice production has to grow manifold.

India, at present, produces around 120 MT of rice in a year and producing more than this looks challenging.

Estimates show that from 1 metric tonne of paddy, just around 1.6 per cent of crude rice bran oil is extracted, and when refined, this reduces further to 1.4 per cent.

Thus, India’s import dependency in edible oils is expected to continue for some time, unless, of course, there is a big change in domestic oilseeds cultivation. Even bringing per hectare yield of oilseeds and pulses to global benchmarks will be a great achievement.

India’s per hectare yield of oilseeds is around 10 quintals, while the global average is around 16 quintals. The yield per hectare of pulses in India is 6.6 quintals, while the global average is over 9 quintals.