Farmers seek assured prices for oilseed shift
INDIAN farmer Shingara Singh has grown grain for 35 years and is one of thousands of protesters against agricultural reforms who have the power to help slash a huge annual bill of $10 billion (£7.36bn) for imports of vegetable oils.
But Singh, 55, says he will only switch to growing oilseeds, such as rapeseed and sunflower, on his 15-acre plot in the state of Punjab, if the government promises guaranteed rates for his produce.
“Sometimes we grow sunflower, but we don’t get to sell it at the MSP,” said Singh, 55, referring to the minimum support price (MSP) the government pays for his rice and wheat. “In fact, we often have to sell sunflower at deep discounts,” added the blue-turbanned Singh, a participant in the farmers’ daily sit-ins on the edge of capital New Delhi.
Such a switch by farmers in the breadbasket states of Punjab and Haryana could cut shipments of edible oils that have tripled over the last two decades to rack up India’s third biggest import bill, after crude oil and gold.
That would also melt bulging inventories of rice and wheat worth billions of dollars that lie unsold in government warehouses, after years of bountiful harvests.
But industry experts say grain growers are unlikely to make the switch in large numbers unless the government
offers financial assistance. “Farmers will shift to oilseeds if the government agrees to give incentives of a few thousand rupees per acre for diversification, which is necessary,” said veteran trader Govindbhai Patel, head of GG Patel & Nikhil Research Co.
MSPs are set for more than 20 crops each year, but state buying agency the Food Corporation of India (FCI) applies them only to purchases of rice and wheat, blaming a lack of funds and storage space.
Only the prospect of financial support will encourage farmers to switch from grain crops, with their governmentset prices, to the less predictable gains of oilseeds.
“We’ve requested the government to give that kind of support to farmers,” said BV Mehta of industry body the Solvent Extractors Association of India (SEA).
The government, which earns 350 billion (£3.51bn) from levies on edible oil im
ports, can easily set aside
40bn a year for crop diversification, through more taxes on such imports, Mehta added.
Higher output of oilseeds and fewer imports of oils will boost farmers’ incomes, create jobs in the domestic crushing industry and help save foreign exchange, he said. The growers’ transition away from grain is a key step in a government plan to boost oilseed production, said a senior government official, who sought anonymity in line with policy.
Government purchases have spurred farmers, especially those with access to better irrigation, to favour grain over the years, rather than oilseeds and pulses. Lower oilseed output has made it the world’s biggest importer of oils, to meet nearly 70 per cent of consumption.
Oilseeds are mainly grown in rain-fed areas with low yields, but Punjab, with efficient irrigation, can expect higher yields, experts say.