Soybean output to decline despite higher acreage this season

Excess rainfall in July-August damages crop, overall yield expected to be lower

Despite higher acreage, soybean output is set to decline this year with excess rains in July and August playing spoilsport in a few major growing regions.

The Solvent Extractors' Association (SEA) estimated a 15.29 per cent increase in crop area under soybean this year at 12.22 million hectares (ha), compared with 10.70 million ha in the previous season. Area under this premier kharif oilseed crop increased despite sustained pressure on prices on farmers' growing holding capacity.

But the increase in acreage is hardly going to help proportionate growth in output due to the possibilities of a fall in average yield this year.

"Excess rainfalls in the July-August season resulted in a massive water logging and flood in a few major growing regions, which is set to affect the yield badly. Consequently, soybean output is likely to remain near last year's level," said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd, on the sidelines of Globoil, an industry event here on Saturday.

According to Shahra, total soybean output is estimated to remain at 11 million tonnes (mt) this year, a decline of three per cent from 11.34 mt in the previous season. In the beginning of this year, the ministry of agriculture estimated a record soybean output at around 13.34 mt. Soybean is a water-sensitive kharif crop, which requires continuous rainfalls. But water logging results in crop damage.

Whatever the case may be, farmers are going to get benefit. As seen in the last season, farmers' holding capacity has increased. Farmers continued intermittent release of soybean to resist its price fall below a certain level.

"Through continuous rise in the minimum support price (MSP), farmers' income has risen. Consequently, their holding capacity has increased. Unlike previous seasons when farmers' used to release soybean fully during the first 10-15 days of harvesting season, they held massive stocks until the last season," said Shahra

With the sporadic rainfalls continued during the current flowering season too, the output, however, may recover its estimated loss. According to Vijay Data, president of the Solvent Extractors' Association (SEA), edible oil consumption in India is set to reach 23 mt by 2020 against 16.5 mt. Stagnant oilseed output from domestic sources is set to increase India's reliance on imports to 60 per cent seven years down the line from 53 per cent now, he added.

To protect the industry from further downturn, Shahra highlighted the need to increase duty differential (between refined and crude palm oil) to at least 7.5 per cent as suggested by the Lahiri Committee a couple of years ago. With the recent levy of 2.5 per cent import duty on crude oil, the duty differential works out to five per cent.