Traders not happy with mustard seed MSP hike

The nominal hike in the minimum support price of mustard seed by Rs 15 per 100 kg for the coming Oct-Nov rabi season will not act as a big incentive for the farmers, industry sources and traders said on Thursday. The MSP for mustard or rapeseed was hiked to Rs1,715 per 100 kg from the earlier Rs 1,700 today.

The open market price of mustard seed last year fell way below the MSP due to bumper production forcing the government to intervene.

"If the government wants to give further incentive to the farmers to produce more it is their wish," D P Khandeliya, former president of Solvent Extractors Association, said.

"The MSP was already higher at Rs 1,700 and increasing it by just Rs 15 will hardly make any difference to total acreage or production of mustard seed," Sandeep Bajoria, chairman of Central Organisation for Oil Industry and Trade, said.

Mustard seed was cultivated in around 6.5 million hectare of land in India during the 2004-05 rabi season with Rajasthan accounting for the highest acreage.

According to official estimates, the country produced around 7.64 million tonne of mustard seed in 2004-05 (June-July), up 23 per cent from a year ago.

The bumper crop led to sharp fall in open market rates of mustard seed to around Rs 1,400-1,500 per 100 kg, forcing the government to procure the seed at Rs1,700 MSP through its nodal agency, the National Agricultural Cooperative Marketing Federation (Nafed).

Currently, Nafed is offloading its mustard seed stock of around 2.09 million tonne, through weekly and daily tenders.

"The actual impact of this increase on crop acreage will only be known when the sowing starts around Oct-Nov," another senior official associated with the mustard seed industry said.

Meanwhile, a group of traders said the increase would act as a good incentive, as farmers know that they will get a good price for their produce even if the prices fall after harvesting.

"It is a step in the right direction and will provide further encouragement to Indian farmers to cultivate more mustard crop," a Jaipur-based trader said.