Surge in edible oil imports hits mustard growers, traders hard

Neeraj Mohan

New Delhi, November 19

Spike in India’s edible oil imports has cost mustard growers dearer, with a steep fall in the prices of the mustard seed in the domestic markets. The prices of mustard started declining following an increase in the country’s edible oil imports reaching to 164.7 lakh tonne during the ongoing oil year.

Figures from mustard growers and traders reveal that the mustard seed prices witnessed a fall of over 30 per cent in the past two years as the average prices have come down to Rs 5,200 a quintal from Rs 7,500 two years ago. Experts believe that the prices started declining since the union government increased the imports since 2021 as a measure to curb escalating inflation.

Seed prices going down

• 164.7 lakh tonne of edible oil imported this year, an increase of 24.4 LT over last oil year
• Rs 5,200 a quintal mustard seed price now. It was Rs 7,500 a quintal two years ago
• Rs 150 a litre or below prices have led traders to refrain from buying the seed

As per the data by the Solvent Extractors’ Association (SEA) of India, the country’s imports of edible oils during 2022-23 (oil year) has witnessed an increase of around 24.4 lakh tonne and reached to 164.7 lakh tonne, as compared to the previous year, thus transforming India into a prime destination for excess oil supplies. The figures reveals that the import of the edible oils during 2022-23 registered an increase of around 17 per cent against 140.3 lakh tonne in 2021-22 and over 33.4 per cent in the past two years against 131.3 tonne in 2020-21.

Despite the impending harvest of early-sown varieties scheduled for the end of December-January, reports from various mustard-growing belts of northern states indicate a prevailing average price of around Rs 5,000-Rs 5200 per quintal, leaving the mustard growers high and dry.

Hike tariffs to 50%, raise msp

The only way forward is to raise the import tariffs to at least 50 per cent, raise the MSP for oilseeds, including mustard, and embark on bringing back the Yellow Revolution. —Devinder Sharma, Agriculture expert

This stands in stark contrast to the minimum support price (MSP) of Rs 5,450 (2023-24) and Rs 5,650 fixed for the crop year 2024-25. Farmers, traders, and stakeholders are unanimous in attributing the falling prices to the surge in edible oil imports. The implications of this trend are significant, with farmers grappling with the economic fallout of diminished profitability in mustard cultivation, following a dip in the yield and heightened input cost.

Besides Rajasthan, Madhya Pradesh and parts of Uttar Pradesh and Haryana also adopt mustard cultivation as a better alternative to the wheat crop. But the falling prices have disheartened the farmers. “Despite the cost advantages of mustard in terms of input and irrigation, the current market prices of Rs 5,000 per quintal make it less lucrative compared to wheat,” said a farmer Ajay Kumar of Haryana’s Karnal.

Even traders are dissuading local traders from procuring mustard for future sales. The contrast is stark, with traders having purchased mustard at rates exceeding around Rs 7,500 per quintal in 2021 and 2022, while current prices below Rs 150 per litre have led them to refrain from buying even at around Rs 5,000 per quintal.

Agriculture policy expert Devinder Sharma says: “Since the collapse of the Yellow Revolution, India has not been able to set the import tariffs to a level that it can allow domestic production of oilseeds to grow. The import tariffs have often been reduced to near zero at times bringing in a flood of cheaper edible oil imports. Mustard cultivation too has become unattractive given the import surge”.