Soybean prices, a key kharif oilseed variety, remain below the minimum support price (MSP) even seven weeks after the government increased import duties on edible oils. Official sources report that the average mandi prices of soybean are currently in the range of INR 4,500 to INR 4,700 per quintal, compared to the MSP of INR 4,892 per quintal set for the 2024-25 season (July-June).
Despite this, retail prices of all edible oils have seen a sharp rise following the duty hike. To date, agencies such as the farmers’ cooperative Nafed and the National Cooperative Consumers Federation of India (NCCF) have procured 26,442 tonnes of soybean from farmers in Madhya Pradesh, Maharashtra, Rajasthan, Karnataka, Gujarat, and Telangana under the price support scheme (PSS) at MSP during the 2024 kharif season.
According to an official, the procurement of soybean at MSP is gaining momentum, although the crop arriving in the markets has higher moisture content due to rains just before harvesting. The official added that arrivals typically peak between October and December.
In September, when mandi prices were still below the MSP due to lower import duties on edible oils, the agriculture ministry approved the purchase of 3.22 million tonnes (MT) of soybean from farmers in key producing states, including Madhya Pradesh (1.36 MT), Maharashtra (1.3 MT), Rajasthan (0.29 MT), Karnataka (0.1 MT), Gujarat (0.09 MT), and Telangana (0.05 MT) under the PSS. In contrast, agencies had procured just 70,000 tonnes of soybean from farmers at MSP in the previous kharif season.
The agriculture ministry has projected soybean production for the 2024-25 crop year (July-June) at 13.36 MT, reflecting a 2.2% year-over-year increase.
In September, the government raised import duties on crude palm oil, soybean oil, and sunflower oil to 27.5% from 5.5%, while duties on refined edible oils increased to 35.75% from 13.75%. This move aimed to boost domestic production, as India imports approximately 58% of its edible oil, totaling around 24-25 MT annually. The duty increase translates to a net rise of 22% on both crude and refined oils, significantly raising import costs.
Currently, India’s domestic production of cooking oils stands at 12.69 MT, mainly from mustard, soybean, and groundnut, while annual consumption is around 29.2 MT. Out of the total annual imports of 16.5 MT of oil, valued at approximately USD 20 billion, palm oil accounts for 60%, with soybean and sunflower oils each contributing 20%.
A Bloomberg report suggests that India’s edible oil imports are expected to decline to 15 MT in the 2024-2025 oil year, down from 16 MT in 2023-2024, driven by record oilseed crops like soybean and rapeseed. B.V. Mehta, executive director of the Solvent Extractors’ Association of India, noted that India is projected to have an excess of 3-4 MT of oilseeds, which could further reduce the need for imports.
According to the Soybean Processors Association of India (SOPA), the country’s soybean output has increased to 12.6 MT in the current kharif season, a nearly 6% increase from the previous year, thanks to favorable weather conditions.
In the previous rabi season, despite record mustard production of 13.16 MT in the 2023-24 crop year, mandi prices remained below the MSP, prompting government agencies to purchase 1.2 MT of mustard from farmers in key producing states such as Haryana, Madhya Pradesh, Rajasthan, and Uttar Pradesh.
Source: Financial Express
