Edible oil prices may decrease after monsoon, due to this the scope of oilseed crops will increase

Monsoon has entered the country. At the same time, by announcing the Minimum Support Price (MSP) for Kharif crops, the government has indicated to the farmers which crop they want. India’s oilseeds production will play an important role for the upcoming kharif season, as the world is plagued by short supply of edible oils. After the announcement of good monsoon, record increase in MSP, import of crude sunflower and soybean oil at zero import duty, now the prices of edible oils (Edible Oil Price) is likely to decrease further. Shankar Thakkar, National President of All India Edible Oil Traders Federation has said this. He said that the government is also worried about the shortage of edible oils. Because in this case we are more dependent on imports. We source about 55 percent of the edible oil from other countries. Therefore, now the government is focusing on the production of oilseed crops.

Thakkar said the import of sunflower oil and soybean oil has also been affected by the war between Russia and Ukraine. Looking at the way this war is going on now, it seems that such a phase will go on for a long time. Perhaps this is one of the reasons why the government has announced import of crude sunflower and soybean oil without import duty. But industries say that the government needs to take similar measures for long-term gains. For the time being, it is expected that the production of oilseed crops of Kharif season will increase. Because good price is being available in the market and a record increase in MSP has been done.

If the Kharif crop is good then a new strategy will have to be made

The president of the federation says that if the picture of Kharif crop becomes clear in October, then a new strategy will have to be made on the relief given in import duty. If the import duty remains zero despite a good crop, then farmers will not get the right price for their crop. With this, they will not sow further and its effect can be seen in the form of inflation later.

Due to the current tariff quota decision, crude sunflower and soybean oil can be imported duty free for the next two years. Now if the prices in the global market fall after three months and domestic production increases, then the local farmers and industries will have to bear the brunt. It may also happen that if the imported oil becomes cheaper than the domestic processing cost, then the local industry will be left with no option but to shut down.

The price in the open market is getting more than the new MSP

The government has recently increased the support price to increase the production of oilseed crops at the local level and to encourage farmers. The support price of products like soybean, sesame, sunflower, groundnut has been increased by five to nine percent. But the current prices of these products show that farmers are already selling the goods in the open market at a price higher than the new support price. The question is, how much will the lure of support price attract farmers in such a situation?

Time to take appropriate decision in view of the circumstances

Thakkar says the issue of tariff quotas for soybean oil and sunflower oil is a warning sign for palm oil exporting countries like Indonesia. Which will force such countries to think of taking drastic steps like banning the export of palm oil overnight. But instead of using the weapon of tariffs to signal that, one must seek an alternative that does not harm local industry. After the issuance of palm oil export permit by Indonesia, the prices of edible oils in the global market have softened. In short, today is the time to take appropriate decisions keeping a close eye on the circumstances.