Government to procure 1.5 MT of mustard as prices fall below MSP

By Sandip Das

With mandi prices of mustard falling below the Minimum Support Price (MSP) of Rs 5,450/quintal after staying far above the threshold for over two years, the government has decided to procure 1.5 million tonne (MT) of the oilseed from farmers in Rajasthan, the biggest producer in the country.

Sources said the Rajasthan state co-operative marketing federation (Rajfed) is likely to procure mustard at MSP from April 1 under the price support scheme for oilseeds of the agriculture ministry. The procurement will be carried out after a gap of two years. In 2020, against a target of 1 MT, Rajfed purchased 0.34 MT of mustard.

Meanwhile, the Haryana state cooperative supply and marketing federation (Hafed) will enter the mandis for commercial purchase of around 20,000 tonne of mustard at the MSP starting Wednesday.

Mandi prices of mustard at Bharatpur (Rajasthan), the hub of oilseeds trade, is currently ruling around Rs 100/quintal to Rs 150/quintal below the MSP on the prospects of a bumper harvest. Such prices are the lowest in two years. The mandis prices in November last year was around Rs 7,500/quintal.

“Procurement by government agencies is likely to push mandi prices above MSP,” an official said.

Currently mustard is being harvested by farmers and the oilseeds variety will start arriving in the mandi in large scale by the end of this month.

According to Roop Singh, CEO, Uttan Mustard Producers Company, a FPO based in Astavan village (Bharatpur), while in the last two years the farmers have received remunerative prices which is reasonably more than MSP, this year’s record harvest is expected to hit farmers hard because of sharp fall in mandi prices.

The agriculture ministry has estimated mustard seed production at a record 12.8 MT in the 2022-23 crop year (July-June). Area under mustard in the current rabi season has been reported at a record 9.8 million hectare (MH) which is 64% more than last five years’ average sown area of 6.4 MH. In the 2021-22 season, mustard sown areas stood at 9.1 MH.

Currently, Rajasthan (40%), Madhya Pradesh (14%), Uttar Pradesh (9%) and Haryana (7%), have 70% share in the country’s mustard seed production.

The Solvent Extractors Association of India (SEA) has urged the government to raise import duties on edible oil, especially palm oil to a minimum of 20% immediately.

“Unbridled imports of palmolein is resulting in collapse of edible oil prices which is impacting marketing of mustard at peak harvest time and causing distress to farmers,” Ajay Jhuunjhunwala, president, SEA, said in a communication to the food ministry.

The retail inflation in mustard oil declined by 9.8% in February, 2023 against a year ago period.

At present, crude palm, soyabean and sunflower oil imports attract only the 5% agri infra cess and a 10% education cess upon it, meaning a total tax incidence of 5.5%.

India imports about 56% of the total annual edible oil consumption of around 24 to 25 MT. Share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.

This article has been republished from The Financial Express.