Soybean has been sown on 12.51 million hectares (MH) this year, a 9% increase from the previous year.
Since the government’s announcement of a hike in the import duty on edible oil two weeks ago, the mandi prices of soybean, a key kharif oilseed variety, have risen by around Rs 500 per quintal. With the new season’s minimum support price (MSP) set at Rs 4,892 per quintal for the 2024-25 season (July-June), soybean prices are now at par with this level as arrivals begin in the market.
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Trade sources told FE that in some markets, mandi prices have already surpassed the MSP, and prices are expected to stay above the benchmark when arrivals peak in November. The increase in import duties on crude and refined oils has made importing costlier, forcing edible oil producers to procure more from the domestic market.
The government recently raised import duties on crude palm, soybean, and sunflower oils to 27.5% from 5.5%, while duties on refined edible oil rose to 35.75% from 13.75%. This implies a net increase of 22% on both crude and refined edible oils, making imports significantly more expensive.
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An official noted that soybean mandi prices are currently around the MSP for this season as the crop has started arriving in the market. However, government agencies like Nafed and NCCF, which are responsible for procurement, have not yet begun purchasing. Given the likelihood that prices will exceed the MSP as arrivals peak, these agencies may struggle to procure crops under the MSP operation.
Earlier this month, when mandi prices were below the MSP due to low import duties on edible oil, the agriculture ministry approved the purchase of 2.92 million tonnes (MT) of soybean from farmers in Madhya Pradesh (1.36 MT), Maharashtra (1.3 MT), Karnataka (0.1 MT), and Telangana (0.05 MT) at MSP.
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Soybean has been sown on 12.51 million hectares (MH) this year, a 9% increase from the previous year. According to the agriculture ministry, total oilseed acreage this season has exceeded the five-year average of 12.29 MH.
Meanwhile, Roop Singh, CEO of Uttan Mustard Producers Company, a farmer-producer organization (FPO) based in Bharatpur, Rajasthan, told FE that mustard prices in mandis have risen to Rs 6,300 per quintal over the last two weeks, compared to the MSP of Rs 5,650 per quintal for the 2023-2024 season (April-June). “At present, most commodities in the mandis are being sold by traders, as farmers have already sold their stock many months ago,” Singh said.
In the last rabi season, despite having a record mustard production of 13.16 MT in 2023-24 crop year (July-June), the mandi prices were ruling below the MSP and the government agencies had purchased 1.2 MT of mustard from the farmers in key producing states of Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh.
The mustad produced by farmers’ cooperative Nafed is currently being offloaded in the market.
India imports about 58% of its edible oil consumption of 24-25 million tonnes (MT).
