Uschina trade war helps raise soya price

MSP was raised to ~3,399 per quintal from ~2,266, average prices ranged between ~3,065 and ~3,238 during Nov 112

NEW DELHI: In what has been a depressing farm season, soyabean stands out as the only commodity — apart from rice — for which farmers are getting relatively better prices among 13 summer-sown commodities for which the Modi government had promised higher returns.

India’s three million soya growers could thank US President Donald Trump, who has set off a global trade war, and the government’s rejigged import tariffs for better soyabean prices, rather than procurement.

To be sure, soyabean prices are still ruling below federally fixed minimum support prices (MSP), but only marginally.

The gap between MSP and actual market prices received by farmers in the case of soyabean has been far narrower than what it has been for other commodities. Low farm-end prices are a key reason why retail food inflation shrunk 0.86% in October, its steepest fall in 13 months, official data show.

In July, the Modi government had raised MSPS for 13 summer crops, setting them each at a minimum of 1.5 times the cost of production. MSPS are meant to be benchmark rates, but two months into the summer harvests, most commodities are selling well below these thresholds. The MSP for soyabean was raised to ~3,399 a quintal from ~2,266 earlier, a 50% jump. Between November 1 and 12, the average prices for soyabean ranged between ~3,065 and ~3,238, data accessed by HT from the agriculture ministry’s Agmarknet portal shows. This is about ~161 to ~334 short of MSP.

In contrast, the gap between actual prices and MSP has been bigger in other items, such as moong, urad (pulses) and ragi (coarse cereals) and maize . For instance, on November 2, in Maharashtra’s Latur, urad sold for ~4,950 against a promised MSP of ~5,600, a gap of ~650.

Soyabean rates have benefited from higher import tariffs, rather than procurement, or the government’s buying of farm produce at MSP rates, experts say. The other major reason is the brewing trade war between US and China.

“There has been a lot of forward trading for November, December and January probably due to the global uncertainties induced by the Us-china trade war. There has been brisk buying of Indian soya by Japan, some Southeast Asian countries and European buyers,” said Davesh Jain, a senior executive of the Indore-based Soyabean Processors’ Association. Oilseeds such as soya are the second-largest agricultural commodity, accounting for 14% of gross cropped area in the country, after cereals.

Trump’s decision to impose heavy tariff on a slew of Chinese goods prompted China to announce on July 1 that it would cut import tariffs on India’s soyabean.

“Major soya importer China is clearly looking to substitute US with India,” said Sachin Kaul of Comtrade Solutions, a commodities trade platform.

Onoctober31,thegovernment raised the import tariff on crude soyabean oil to ~728, a raise of 15%. Realising that cheap import of edible oils was hurting Indian farmers, the government has cumulatively raised import tariff on edible oils. For instance, import duties on crude palm oil stands at 44% from 12.5% in 2015.

But for exports, farmers could have been worse off, given that there has been a 1.7% increase in total soyabean area from 10.77 mn hectare in 2017-18 to 10.96 mn hectare in 2018-19, according official forecasts.

Higher acreage will likely take up the total soya output to 13.46 mn tonne, compared to last year’s 10.98 mn tonne, the projections show.