Oils take farmers down the slippery slope

THE OTHER INDIA

Even the high prices of oil in the market do not translate into gains for these farmers, who have now been exposed to a glut of oil imports, thanks to removal of import duties on edible oils.

For Karam Singh of Babanjot village in Sravasti district of Uttar Pradesh, this year's high inflation helped marginally, though the prices he got were hardly anywhere near the retail price of oil. The latter, too, is anyway coming down due to imports. He got Rs 20 per kg for the mustard he harvested recently. This was slightly better than the Rs 16 he got last year.

The import duty cuts announced by Finance Minister P Chidambaram recently are certainly not going to help his cause. According to Chandra Kumar Chabbra, general secretary, Lucknow Vyapar Mandal, the retail price of mustard oil has already eased to almost Rs 64 per kg, down from a high of Rs 90 a few weeks ago.

The minimum support price (MSP) of mustard is Rs 1,800 per quintal. And for people like Karam Singh, mustard farming is getting less and less attractive. 

In Haryana, mustard is the major oilseed. Officials in Hafed (Haryana Market Federation) say the mustard crop is being sold at Rs 2,300-2,400 per quintal in the current season.

Private millers are purchasing at a price higher than the MSP. So Hafed did not procure mustard for the National Agricultural Cooperative Marketing Federation of India (Nafed).

Hafed would purchase at the market rate for its own consumption, said Managing Director Sidhir Rajpal. The government offers an MSP of about Rs 1,500 a quintal for most edible oils like groundnut, sunflower, and Rs 1,715 for mustard. The market prices are much higher. The result has seen a steady decline in production.

In Uttar Pradesh, the area under mustard came down from 630,000 hectares in 2005-06 to 599,000 hectares in 2006-07. The production came down from 720,000 tonnes in 2005-06 to 612,000 tonnes in 2006-07.

The total production of oilseeds, including mustard, was 749,000 tonnes in 2006-07, down from 878,000 tonnes in the previous year.

The production of edible vegetable oils in the country declined from 37 million tonnes (mt) in 2005-06 to 32.8 mt in 2006-07. Imports of vegetable oil were 5.64 mt in 2004-05, 5.43 mt in 2005-06 and 5.80 mt in 2006-07.

The decline in production is stark when compared with the production in the 90s. Says Bhaskar Goswami, agricultural economist from the Forum for Biotechnology and Food Security: "The central government destroyed systematically what it itself tried to build."

"The country achieved self-sufficiency in 1993 but procurement was stopped then and imports started leaving farmers at the mercy of the market," he adds, referring to the government's oil-seed technology mission in the1980s started at the behest of the then prime minister Rajiv Gandhi.

In Punjab, the total area under oilseed cultivation declined from 82,000 hectares in 2005-06 to 70,000 hectares in 2006-07.

The procurement of mustard is done mostly by private traders, who offered Rs 300-400 per quintal more than the MSP of Rs 1,715 per quintal, local farmers say.

T Haque, former chairperson of the Agricultural Commission on Costs and Prices, says: "The entire gamut of policies on oil seeds have serious problems that need immediate correction."

"First, there is a need to bring technology to help farmers improve productivity. Second, the pricing has to be corrected to make it worth growing, and third, there should be reasonable levels of import duties so that the domestic production is not killed," adds Haque, who recommended steep rises in minimum support prices for most commodities before his exit.

Says Goswami: "It is tragic that oilseeds, which can bring livelihood to the poorest dry-land farmers, are totally unremunerative, due to government policies which reversed the gains of Rajiv Gandhi's oil seed technology mission."