Economic theory holds that when supply is limited, prices tend to move up. But for 45-year-old Puran Singh of Mausampur village in Rajasthan’s Alwar district, his mustard crop gives him returns that do not fit into neat economic theory.
Demand for mustard oil is growing at almost 20 per cent a year, but seed prices rarely keep apace. At the best of times, farmers like Singh hope for a price of Rs 3,000-3,500 per quintal from mustard, with an off-season premium of Rs 400-500.
Prices of mustard oil moved up by around Rs 20-30 per litre since March 2014, according to government data. Mustard oil prices have been steadily climbing over the last few years but seed rates remain inelastic because of unabated adulteration.
"If the crop is wet, it fetches Rs 100-120 per quintal more than the market rate, but if it dries then we stand to lose that much as dry mustard is lighter," Singh says. His field is divided equally between mustard and wheat, the two main crops grown during the winter rabi season.
"Wheat has more assured returns, but it requires more labour than mustard and also needs at least six bouts of watering. Mustard just needs one normal rain during winter," says Singh’s wife, explaining why farmers in almost half of Rajasthan plant mustard during the rabi season.
In 2014-15, according to official data, India’s mustard production is expected to be around 7.36 million tonnes, 1-1.2 million tonnes less than the previous year. The recent bout of rain is expected to lower the output further.
"The reason for the low correlation between mustard seed and oil prices is adulteration, which keeps oil supplies intact despite a drop in seed output," says Aswani Kumar of Agarwal Traders in Alwar's new market yard.
The real oil content in mustard is around 42 per cent, which means if the seed production is 7.36 million tonnes, the availability of pure mustard oil should be around 3-3.1 million tonnes. But, as Agarwal says, the actual oil available in the market is never less than 6 million tonnes a year. The difference is made up by mixing mustard oil with rice bran and palmolein in quantities far higher than specified by law. Rice bran and palmolein are the most common oil varieties mixed with mustard.
A Food Safety and Standards Authority of India (FSSAI) guideline from 1998 allows blending of rice bran and palmolein with mustard up to 25 per cent to make refined vegetable oil, but traders allege the blend is higher in most locally manufactured brands. "The local players do most of this mixing, which is why one finds mustard oil brands with every possible name," Agarwal says.
Agarwal supplies mustard seed to oilseed processors like Adani Wilmar and P Mark. He says of the three or four railway wagons of mustard oil that leave Alwar every week for Assam, almost 60 per cent is adulterated. A railway wagon normally carries 40 boxes, each holding 4,000 tins of 15 litres of mustard oil. "We have complained several times to the authorities," Agarwal says. "Have any local brand tested in a recognised laboratory and I am sure none will pass,“ he adds.
Vivek Puri, managing director of Puri Oil Mills, says the health concern in mustard oil is from adulteration. "Even if loose edible oil sellers comply with food regulations and standards, there is no guarantee that the oil will remain unadulterated as it passes through several hands," Puri points out.
But this poor man's oil sells at over Rs 100 a litre and it is difficult to convince the man on the street to shift to packaged mustard oil. Puri suggests the creation of a mustard promotion board on the lines of the coconut and other development boards to promote the crop.
Ajeet Singh, another farmer in Alwar, has a simpler solution. "Mustard cannot always be the secondary rabi crop. If we get continuous power we can ensure good yield from both wheat and mustard," he says.
Wheat and mustard are the two main crops grown during the rabi season, sowing for which starts in November and the crop is harvested from February. Grown after the monsoon season, rabi crops are dependent on irrigation. In Singh’s village, barely 300 km from Delhi, power is supplied for six hours either in the day or at night. "If we get at least 8-12 hours uninterrupted power, we can ensure good yields and better returns from mustard," Singh says.