Oilseed prices expected to fall

Farmers to bear the brunt.

Oilseed farmers are likely to end up with heavy losses as the government drastically cut import duties on crude and refined edible oils.

Falling oil prices in the international market coupled with the present duty cut may lead to distress sale of their seed stocks resulting in a price decline of up to Rs 4 a kg, according to Dinesh Shahra, managing director, Ruchi Soya Industries, the largest edible oil refinery in India. "Some oilseed farmers may, however, wait and watch global developments for a while."

B V Mehta, executive director of the Solvent Extractors' Association (SEA), said whenever edible oil prices come down, prices of seeds also decline correspondingly.

"Therefore, this time also, the price of oilseeds may fall but the quantum of the decline is yet to be seen," he added. At present, soybean is sold at Rs 21 a kg while groundnut is quoted at Rs 27.50 a kg. Soybean and castorseed are sold at Rs 22.15 a kg and Rs 26 a kg.

The oilseed crushing industry is likely to be hit badly with the decision as companies that have procured raw material at record prices, will have to crush the seed and sell the refined oil at lower rates as the seed prices since March this year have declined by at least 25 per cent.

"The real loss or profit of a soybean crusher cannot be quantified but a majority of them would be affected with the sudden decision of the duty cut as prices in the global market are already declining," said Rajesh Agarwal, co-ordinator at the Soybean Processors Association.

Shahra said farmers would suffer badly with the government's decision on the import duty cut. "The industry is expecting 20 per cent growth in soybean output this year along with a higher acreage area.

"Soybean farmers were very enthusiastic with the price rise and, therefore, were eager to sow the crop next season. That persuaded us to estimate the total output next year at 10.5-11 million tonnes from 9.4 million tonnes this season and 7.9 million tonnes last year." The farmers would be very disappointed with the duty cut decision, Shahra added.

India imports 1.1 million tonnes of soybean oil out of the total edible oil imports of 5.5 million tonnes. Of the 6.5 million tonnes of edible oil produced domestically, 1.6 million tonnes is soybean oil.

Cargill cuts prices by Rs 10/kg

Cargill India, one of the largest edible oil producers in the country, has reduced prices by 8-10 a kg with immediate effect.

However, consumers will have to wait at least for 10 days for rates to fall as traders are unlikely to offload stock at losses.

Ruchi Soya Industries, on the other hand, is still awaiting the impact on procurement of raw material to announce a price cut.