High carryover stock, low prices make farmers fear high output.
Ramlal Dahanukar, an oilseed grower in Satara district of Maharashtra, is worried at the positive monsoon forecast for the ongoing kharif sowing season. For, it will mean more kharif output, and prepare ground for higher rabi output.
Higher output hits farmers’ incomes. Reason: Farmers and stockists are holding over 15 million tonnes oilseeds from the previous season, which has led to a big fall in prices. So, high output this year will create a glut, resulting in a further fall. Many oilseed growers like Dahanukar have gone deeper into debt in the past three years as their incomes have fallen.
Dahanukar owns four acres on which he grows groundnut, soybean and other oilseeds. He is now considering a shift to more remunerative crops. Over the past three years, oilseed productivity has fallen substantially due to lower soil fertility. A dramatic fall in prices will be a further blow.
“Oilseed prices are around the minimum support price (MSP). The government increased MSP by a paltry three-five per cent, as compared to the 30-40 per cent rise in pulses for the 2010-11 season. If the market is pressured by additional output this year, many farmers will fall into debt,” said Dahanukar.
According to data by the Solvent Extractors Association (SEA), the oilseed yield in India has fallen 19 per cent in the past three years, due to lower soil fertility and rain. The oilseed yield was 1,115 kg per hectare (ha) in 2007-08. It slipped to 1,026 kg per ha in 2008-09 and 903 kg per ha in 2009-10.
The area under oilseeds fell marginally to 26.9 million ha in 2009-10, after a high of 27.46 mha the previous year, from 26.7 mha the preceding year. Total oilseed production was 24.3 mt last year.
Less than 25 per cent area under oilseeds is irrigated, which makes these crops vulnerable to weather risk. This has resulted in slow output growth and continuing low yields. At 900 kg per ha, Indian oilseed yields are about half the world average and less than a third of leading producers’.
“Mills will start crushing if the price recovers to the parity level. Today, mills are losing about Rs 1,000 per kg on each tonne of seed crushed. Therefore, most mills have either shut down or have reduced their capacity to the minimum. We hope mills crush all the seeds available in the market before the beginning of the next season,” said B V Mehta, executive director, SEA.
Average groundnut (in shell) prices dropped 24 per cent to Rs 21,691 per tonne in 2009 from Rs 28,534 per tonne in 2008. Rapeseed/mustard seed prices fell nine per cent to Rs 26,205 per tonne from Rs 28,873 per tonne. Sunflower seed and castor seed dropped 22 per cent and 10 per cent in 2009 to Rs 24,104 per tonne and Rs 25,343 per tonne, respectively.
“If the government levies an import duty of 10-20 per cent, the edible oil price will rise (enough) to make crushing remunerative,” said Mehta.
