iGrain India - Despite the government's increase in import duties on edible oils by 20 percent, the objective of raising soybean prices for farmers has yet to materialize effectively.
The government's move was aimed at supporting Kharif oilseed crops, particularly soybean, by making them more competitive in the market.
However, the reality on the ground shows that the price of soybean is still falling below the Minimum Support Price (MSP).
For the 2024-25 marketing season, the central government raised the MSP for soybean to Rs 4892 per quintal, an increase of Rs 292 (or 6.3%) from the previous year's MSP of Rs 4600. However, the average wholesale market price of soybean is hovering around Rs 4500-4700 per quintal, still lower than the MSP.
This discrepancy highlights that the price support mechanism has not been fully successful in pushing prices higher in line with the government’s expectations.
While government agencies like NAFED and NCCF have been buying soybean from farmers under the MSP scheme, the pace of procurement has been sluggish.
As of the end of last week, only 26,442 tonnes of soybean had been procured, far short of the government's target for the season.
The procurement process has been slow, partly due to factors like higher moisture content in the crop, a result of heavy rainfall in many soybean-growing regions before harvest.
This has led to delays, and the strong flow of soybeans into the markets typically picks up only towards the end of October, continuing through December.
The central government had set an ambitious target to buy 32.20 lakh tonnes of soybean for the 2024-25 season, with significant volumes earmarked for major soybean-producing states like Madhya Pradesh, Maharashtra, and Rajasthan.
Despite this, the slow pace of purchases and price fluctuations indicate that the MSP scheme may not yet be effectively stabilizing prices for farmers.
Given these factors, it seems that the increase in import duties and other policy measures might not be enough to resolve the issue of low prices for soybean farmers in the short term.