CACP suggests linking of oil content to rapeseed-mustard MSP to boost output

The commission says it will encourage farmers to bring more area under these crops

As per CACP, oilseeds are typically cultivated on marginal land and largely dependent on rainfall in India

In its ‘Price Policy for Rabi Crops: The Marketing Season 2022-23’, the Commission for Agricultural Costs and Prices (CACP) has suggested that to encourage farmers and increase the area under rapeseed-mustard, their minimum support price be linked to the oil content in these crops.

It has stated, “As oil content in rapeseed and mustard seeds varies widely across different varieties, their MSP may be linked to the oil content to increase area under high oil-yielding varieties of these crops and incentivise farmers. On the basis of detailed discussions held with various stakeholders, the commission is of the view that the MSP of rapeseed-mustard be linked to the basic ‘oil content’ of 35% in seed and farmers be incentivized for every 0.25 percent point increase in ‘oil content’ beyond that.”

The CACP has stated that to determine the incentive for higher ‘oil content’, one quintal of rapeseed-mustard seed will give 35 kg of oil and 65 kg of oil cake. “Adjusting the value of cake, the cost of rapeseed-mustard seed (oil without cake) would be Rs 3,198, which will contain 35 kg of oil. Thus, the MSP will increase by Rs 20.49 per quintal for every 0.25 percent point increase in oil content,” it has mentioned.

The commission has said the cost per unit of oil content slowly decreases with increase in ‘oil content’. It has observed, “Taking average oil content between 35 and 48%, the average cost for every 0.25 percent point worked out to be Rs 20.49 per quintal. Hence, the commission strongly suggests that MSP of rapeseed-mustard seeds may be increased by Rs 20.49 per quintal for every 0.25 percent point increase in ‘oil content’ over and above the base oil content of 35%.”

The CACP has made this suggestion, citing India’s high dependence on vegetable (mostly edible) oils imports. “As per the commission, India’s vegetable (mostly edible) oil imports have increased from about 8.4 million MT (Rs 46,334 crore) in 2011-12 to about 13.5 MT, valued at Rs 82,118 crore in 2020-21. India is highly dependent on imports of vegetable oils, and around 60% of domestic demand is met through imports,” it says in its price policy for 2022-23 rabi marketing season.

Vegetable oils accounted for about 47.5% of total agricultural imports in the country in 2020-21. The major vegetable oils imported (in volume terms) during 2020-21 were crude palm oil (55.4%), soybean oil (26.9 %) and sunflower oil (16.1%). The year-on-year growth of the imports of vegetable oil during 2020-21 in value terms is 19.8% despite a considerable decline of 8% in volume terms which reflects the significant increase in global price level of edible oils.

In the light of domestic supply deficit in edible oils, the challenge before the country in the oilseeds sector is from both fronts — insufficient domestic production and also from the external front of increasing global price level. The edible oil consumption has been consistently outpacing production mainly due to population growth, increasing income levels and the emerging dietary changes. The most significant problem in the oilseeds sector in the country is the low productivity of oilseed crops, as oilseeds are typically cultivated on marginal land and largely dependent on rainfall. The oil palm can be the most feasible alternative to substitute edible oils imports competitively.

Acting on the CACP recommendations, the Indian government’s Cabinet Committee on Economic Affairs (CCEA) has announced the MSP of rapeseed-mustard at Rs 5,050 per quintal for the RMS 2022-23, an increase of Rs 400 per quintal from RMS 2021-22. Safflower MSP has been raised by Rs 114 per quintal to Rs 5,411 per quintal.

OILSEEDS MSP FOR MARKETING SEASON 2022-23

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