iGrain India - The situation with soybean prices in India highlights several key challenges for both farmers and the government, despite efforts to improve conditions.
Production and Forecasts: The Union Agriculture Ministry has estimated an increase in soybean production for the 2024-25 season by 3 lakh tonnes, from 130.60 lakh tonnes in 2023-24 to 133.60 lakh tonnes. This increase in production generally signals a positive trend, but the downside is that the market price for soybean is weak, which undermines the potential benefits for farmers.
Weak Market Prices vs. MSP: While the government has raised the minimum support price (MSP) of soybean by 6.3%, from Rs 4600 per quintal to Rs 4892 per quintal, market prices are still significantly lower than the MSP. This discrepancy between the MSP and the wholesale market price is creating a situation where farmers do not benefit from the higher MSP, as they are unable to sell at these levels in the open market.
Government Measures: To improve soybean prices, the government increased the import duty on edible oils by 20%, hoping to stimulate domestic oilseeds production and improve prices. However, this has yet to show tangible results. Additionally, government agencies have begun buying soybean directly from farmers at the MSP, but the scale and pace of these purchases have been slow, failing to create a substantial impact on prices.
Dissatisfaction Among Farmers: Farmers in major soybean-producing states like Madhya Pradesh and Maharashtra are dissatisfied with the weak prices, particularly with the added context of state assembly elections. The ruling party is facing pressure as the slow pace of government procurement is failing to address these concerns effectively.
Government Procurement Efforts: As part of its effort to support farmers, the government has set a target of purchasing 32.30 lakh tonnes of soybean for the Kharif 2024 season. However, as of now, only around 34-35 thousand tonnes have been procured, with a significant portion of this coming from Telangana. The government procurement window extends from late September to December, and in Madhya Pradesh, it runs until January 2025. However, the overall progress has been slow, and unless procurement accelerates, soybean prices are unlikely to see significant improvement.
Impact of High Arrival: With the heavy arrival of soybean expected to continue through December, it’s clear that unless the pace of government procurement picks up significantly, farmers may continue to face weak prices in the market. Government intervention through procurement remains the key tool to stabilize prices and provide relief.
In conclusion, while the government has taken steps to address the price issue, the slow pace of intervention and the current market realities are leaving farmers dissatisfied and struggling with low prices, especially in light of the large soybean harvest. The success of the government's efforts will likely depend on how quickly and effectively it can ramp up procurement operations and balance market supply and demand.